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Departures from Cost Basis for Inventory Measurement

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    Kelvin O.
    KE
    Kelvin O.

    Assets should be reported at historical cost inorder to avoid distortion in the value of assets as they change over time.departure is made from historical accounting when the value of the asset goes below the historical cost such that the replacement cost of the asset cannot recoup the original value of the asset. the NRV of an asset is the value that can be realized when an asset is sold/valued below the historical cost as a result of depreciation,amortization,obsolescence etc.Low cost or market value is valuing an asset using the historical cost or market value whichever is lower based on what it can fetch on the market

    Penelope M.
    US
    Penelope M.

    A Iffy situation, because what I would do since I have to spend money to get the products sold, is buy but sell at a upscale price, after I have done my homework to see what other businesses similar to mine, asking price is f0r the item that is being sold, so when the or if the item is returned for whatever reason, I would have still made a profit even though they have returned my item, why because i have my property back and If I sold something for $100 or more than its value I have still have made some money, becuase if they bring it back a month later with no insurance or warranty, they would still not get the full value for what they paid for,

    Penelope M.
    US
    Penelope M.

    If LCM is applied to an item-by-item basis, ending inventory would be $5000 the company would deduct the $5000 ending inventory from cost of goods avilable for sale on the income statement and report this inventory int he current assets section fo the balance sheet.

    Penelope M.
    US
    Penelope M.

    it's simple just itemize

    Ebrima J.
    MR
    Ebrima J.

    at the most recent price.

    Ogunbowale A.
    MY
    Ogunbowale A.

    A typical example of an historical cost for an item is a bookmark cost(bookmark value) of a building that was built about ten years ago at a price of about 50,000dollars this happens to be the original price of the building ten years ago but however the market price of such building would have accumulated over time ten years later as a result of economical factors and rising cost of properties so the new market value for the building is 100,000dollars. So judging from my observation of departure from cost basis for inventory measurement relating to the example i stated earlier on, the value of inventory is being depreciated as a result of lack of utilities thereby affecting the price of goods so an entrepreneur or a business expertise will tend to differ in the historical cost price for inventory measurement thereby not adapting historical cost as a yardstick for determining cost basis for inventory measurement as a result of lack of utilities and proper management of inventories

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