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    Pas 2 Inventory

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    Crizhae Ocon
    1. PAS 2 provides that inventories must be measured using either the first-in, first-out (FIFO) method or the weighted average cost formula. 2. The document demonstrates examples of calculating inventory balances and costs under the FIFO, weighted average, and moving average inventory cost flow assumptions. 3. Additional inventory costing methods discussed include specific identification, relative sales price, lower of cost or net realizable value, and methods for inventory write downs.

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    Pas 2 Inventory

    Uploaded by

    Crizhae Ocon
    27 views16 pages
    1. PAS 2 provides that inventories must be measured using either the first-in, first-out (FIFO) method or the weighted average cost formula. 2. The document demonstrates examples of calculating inventory balances and costs under the FIFO, weighted average, and moving average inventory cost flow assumptions. 3. Additional inventory costing methods discussed include specific identification, relative sales price, lower of cost or net realizable value, and methods for inventory write downs.

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    1. PAS 2 provides that inventories must be measured using either the first-in, first-out (FIFO) method or the weighted average cost formula. 2. The document demonstrates examples of calculating inventory balances and costs under the FIFO, weighted average, and moving average inventory cost flow assumptions. 3. Additional inventory costing methods discussed include specific identification, relative sales price, lower of cost or net realizable value, and methods for inventory write downs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    27 views16 pages

    Pas 2 Inventory

    Uploaded by

    Crizhae Ocon
    1. PAS 2 provides that inventories must be measured using either the first-in, first-out (FIFO) method or the weighted average cost formula. 2. The document demonstrates examples of calculating inventory balances and costs under the FIFO, weighted average, and moving average inventory cost flow assumptions. 3. Additional inventory costing methods discussed include specific identification, relative sales price, lower of cost or net realizable value, and methods for inventory write downs.

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    PAS 2

    INVENTORY
    INVENTORY COST FLOW
    PAS 2 expressly provides that cost of inventories
    shall be determined by using either:
    a. First in , First out
    b. Weighted average
    FIRST IN FIRST OUT Units Unit Cost Total Cost Sale (units)

    Jan 1 Beginning balance 800 200 160,000

    Jan 8 Sale 500

    Jan 18 Purchase 700 210 147,000

    Jan 22 Sale 800

    Jan 31 Purchase 500 220 110,000

    Ending Inventory units? (800 + 700 + 500 – 500 – 800) 700 units
    FIRST IN FIRST OUT Units Unit Cost Total Cost Sale (units)

    Jan 1 Beginning balance 800 200 160,000

    Jan 8 Sale 500

    Jan 18 Purchase 700 210 147,000

    Jan 22 Sale 800

    Jan 31 Purchase 500 220 110,000

    Ending Inventory units? (800 + 700 + 500 – 500 – 800) 700 units
    WEIGHTED AVERAGE - PERIODIC
    Units Unit Cost Total Cost Sale (units)

    Jan 1 Beginning balance 800 200 160,000

    Jan 8 Sale 500

    Jan 18 Purchase 700 210 147,000

    Jan 22 Sale 800

    Jan 31 Purchase 500 220 110,000

    2,000 417,000

    Ending Inventory units? (800 + 700 + 500 – 500 – 800) 700 units
    Average Cost per Unit (417,000/2,000) 208.50
    WEIGHTED AVERAGE - PERPETUAL
    Units Unit Cost Total Cost Sale (units)

    Jan 1 Beginning balance 800 200 160,000

    Jan 8 Sale 500

    Jan 18 Purchase 700 210 147,000

    Jan 22 Sale 800

    Jan 31 Purchase 500 220 110,000

    2,000 417,000

    Ending Inventory units? (800 + 700 + 500 – 500 – 800) 700 units
    WEIGHTED AVERAGE - PERPETUAL
    Units Unit Cost Total Cost

    Jan 1 Beginning balance 800 200 160,000

    Jan 8 Sale (500) 200 (100,000)

    Balance 300 200 60,000

    Jan 18 Purchase 700 210 147,000

    Balance 1,000 207 207,000

    Jan 22 Sale (800) 207 (165,600)

    Balance 200 207 41,400

    Jan 31 Purchase 500 220 110,000

    Balance 700 216 151,400


    FIRST IN FIRST OUT Units Unit Cost Total Cost

    Jan 1 Beginning balance 5,000 200 1,000,000

    Jan 10 Purchase 5,000 250 1,250,000

    Jan 15 Sale (7,000)

    Jan 18 Sales Return 1,000

    Jan 22 Purchase 16,000 150 2,400,000

    Jan 31 Purchase Return (2,000) 150 300,000

    Ending Balance 18,000


    FIRST IN FIRST OUT Units Unit Cost Total Cost

    Jan 1 Beginning balance 5,000 200 1,000,000

    Jan 10 Purchase 5,000 250 1,250,000

    Jan 15 Sale (7,000)

    Jan 18 Sales Return 1,000

    Jan 22 Purchase 16,000 150 2,400,000

    Jan 31 Purchase Return (2,000) 150 300,000

    Ending Balance 18,000


    MOVING
    AVERAGE - Units Unit Cost Total Cost

    PERPETUAL Jan 1 Beginning balance 5,000 200 1,000,000

    Jan 10 Purchase 5,000 250 1,250,000

    Balance 10,000 225 2,250,000

    Jan 15 Sale (7,000) 225 (1,575,000)

    Balance 3,000 225 675,000

    Jan 18 Sales Return 1,000 225 225,000

    Balance 4,000 225 900,000

    Jan 22 Purchase 16,000 150 2,400,000

    Balance 20,000 165 3,300,000

    Jan 31 Purchase Return (2,000) 150 (300,000)

    Ending Balance 18,000 167 3,000,000


    WEIGHTED AVERAGE - PERIODIC
    Units Unit Cost Total Cost

    Jan 1 Beginning balance 5,000 200 1,000,000

    Jan 10 Purchase 5,000 250 1,250,000

    Jan 22 Purchase 16,000 150 2,400,000

    Jan 31 Purchase Return (2,000) 150 (300,000)

    Ending Balance 24,000 4,350,000

    Weighted average unit cost (4,350,000/24,000) 181.25


    SPECIFIC
    IDENTIFICATION
    RELATIVE SALES
    PRICE METHOD
    Allocate LUMP SUM price based on relative sales price
    RELATIVE SALES
    PRICE METHOD
    Allocate LUMP SUM price based on relative sales price
    LOWER OF COST AND NET
    REALIZABLE VALUE
    • Item by item or individual basis
    METHODS OF INVENTORY
    WRITEDOWN
    • Direct method or cost of goods sold method
    • Allowance method or loss method

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