possible need to impair the value of Three Little Pigs Inc.'s inventories. Alternative 1: Continue to carry all inventories at cost basis. ARB28, Par.14c ?Such temporary market declines need not be recognized at the interim date since no loss is expected.? EITF, 86-13 Discussion ?? option 28 requires inventory be written to lower of cost or market unless (1) substantial evidence exists that market prices will recover before the inventory is sold? Write down is generally required unless the decline
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adjusting lower cost of market inventory on valuation, (2) capitalizing interest on building construction, (3) recording gain or loss on asset disposal, and (4) adjusting goodwill for impairment. To alleviate the concern of the client of why the information is requested analysis of each topic and its importance will be discussed in this paper. The adjusting lower cost of market inventory valuation is essential because through the life cycle of inventories the inventories will decline in value. Although
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When evaluating inventory impairment for the PIGS entity, it depends specifically on the character and composition of the inventory. The method used should clearly reflect the income of that period by applying the rule of lower of cost of market to each item or on a total inventory basis. If the company evaluates impairment by product line, there must be more than one major product that exists. This company does have more than one product line that exists consisting of: live hogs for sale, developing
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reports estimate of receivables at realizable value; one composite rate, an aging schedule ( most accurate) --asset: future economic benefit inventory: items held for sale in ordinary course of business or goods to e used in the production of goods to be sold --beginning inventory + cost of goods purchased = COGAS(available) = COGS + ending inventory --perpetual: purchase are debited
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__________ than U.S. GAAP.. 4. Inventory is an example of IAS that provides less extensive guidance than U.S. GAAP. a. True/False 5. What should include in the cost of inventories? 6. List costs that are not included in the costs of inventories. 7. How does IAS 2 require inventory to be reported on the balance sheet? How does U.S. GAAP require inventory reported on the balance sheet? 1 8. How does application of the lower of cost or market rule for inventories differ between IFRS and U.
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To begin with, what is inventory valuation? Inventory valuation is the dollar amount of the merchandise within a company's inventory. Primarily, the price per unit is the cost to get the inventory items in place and ready for use. This notion is frequently complicated by the company’s failure to match actual cost flow with specific physical units (Gray & Ehoff Jr., 2014). What are the differences between U.S. GAAP and IFRS? U.S. GAAP allows numerous ways, such as retail method, to determine the
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Research and Analysis Should inventory be evaluated for impairment under the lower of cost or market method on a total inventory basis? The CEO of Chickenella Inc. has argued that the prices of processed ostrich products exceed the cost to raise and produce, therefore there is no lower of cost or market issue. The company now wants to determine whether or not inventory should be evaluated for impairment under the lower of cost or market method on a total inventory basis as of December 31, 2014
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* Relevant Facts 1. There are essentially three major categories of hog inventory—live hogs ready for sale, developing animals, and processed pork products. 2. Not all live hogs in other locations that cannot be easily transported and processed at the Company’s main processing plants. As a result, these live hogs must be sold to third parties at spot market prices. 3. There are several factors, including increased supply of pork due to the capture of the Big Bad Wolf, have lead to the declining
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parties if we evaluate ASC 330-10-35-2, which states that “…, in accounting for inventories, a loss shall be recognized whenever the utility of goods is impaired by damage, deterioration, obsolescence, changes in price levels, or other causes. The measurement of such losses shall be accomplished by applying the rule of pricing inventories at the lower of cost or market.” Since we are dealing with specialized inventories, we can further uphold our previous position by looking at ASC 905-330-35-2 that
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out within the accounting entries will be explaining and analyzing the following issues for the customer. Adjusting lower cost of inventory on market valuation, interest Capitalizing on building construction, Recording gain or loss on asset disposal and finally the theme adjusting for goodwill impairment Adjusting lower cost in market inventory on valuation Inventories are necessary for companies because it is a fundamental part of the business operation. They seek to retain control of the articles
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