O'Reilly logo

Wiley GAAP 2013: Interpretation and Application of Generally Accepted Accounting Principles by Joanne M. Flood

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 11

INVENTORY

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Ownership of Goods

Goods in transit

Consignment arrangements

Product financing arrangements

Sales made with the buyer having the right of return

Accounting for Inventories

Valuation of Inventories

Raw materials and merchandise inventory

Manufacturing inventories

Determining inventory cost

Cost flow assumptions

First-in, first-out (FIFO)

Last-in, first-out (LIFO)

Weighted-average and moving-average

Comparison of cost flow assumptions

Lower of cost or market (LCM)

Inventory estimation methods

Other inventory valuation methods

Differences between GAAP and Income Tax Accounting for Inventories

Full absorption costing—income tax

Uniform capitalization rules—income tax versus GAAP

Inventory capitalization for retailers/wholesales—income tax versus GAAP

Other Inventory Topics

Purchase commitments

Inventories valued at selling price

Stripping costs incurred during production in the mining industry

Interim reporting

PERSPECTIVE AND ISSUES

The accounting for inventories is a major consideration for many entities because of its significance to both the income statement (cost of goods sold) and the statement of financial position (current assets). Inventories are defined in Accounting Standards Codification (ASC) 330-10-20 as:

The aggregate of those items of tangible personal property that have any of the following characteristics: a) held for sale in the ordinary course of business; b) in process ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required