上财CGA班中级财务会计FA2+PS1课件Ch09_IFRS.ppt

C H A P T E R 9,INVENTORIES: ADDITIONAL VALUATION ISSUES,Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield,Special valuation situations Relative sales value Purchase commitments,Lower-of-Cost-or-Net Realizable Value (LCNRV),Valuation Bases,Gross Profit Method,Retail Inventory Method,Presentation and Analysis,Net realizable value Illustration of LCNRV Application of LCNRV Recording net realizable value Use of an allowance Recovery of inventory loss Evaluation of rule,Gross profit percentage Evaluation of method,Concepts Conventional method Special items Evaluation of method,Presentation Analysis,Inventories: Additional Valuation Issues,A company abandons the historical cost principle when the future utility (revenue-producing ability) of the asset drops below its original cost.,Lower-of-Cost-or-Net Realizable Value,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,LCNRV,Net Realizable Value,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Estimated selling price in the normal course of business less estimated costs to complete and estimated costs to make a sale.,Illustration 9-1,Lower-of-Cost-or-Net Realizable Value,Net Realizable Value,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Illustration 9-2 LCNRV Disclosures,Lower-of-Cost-or-Net Realizable Value,Illustration of LCNRV: Regner Foods computes its inventory at LCNRV.,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Illustration 9-3,Lower-of-Cost-or-Net Realizable Value,Illustration 9-4,Methods of Applying LCNRV,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,Methods of Applying LCNRV,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,In most situations, companies price inventory on an item-by-item basis. Tax rules in some countries require that companies use an individual-item basis. Individual-item approach gives the lowest valuation for statement of financial position purposes. Method should be applied consistently from one period to another.,Cost of goods sold (before adj. to NRV) $ 108,000 Ending inventory (cost)82,000 Ending inventory (at NRV) 70,000,Inventory 12,000,Loss due to decline to NRV12,000,Inventory 12,000,Cost of goods sold12,000,Loss Method,COGS Method,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Recording Net Realizable Value Instead of Cost,Lower-of-Cost-or-Net Realizable Value,Statement of Financial Position Presentation,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,Partial Statement,Income Statement Presentation,LO 1,Lower-of-Cost-or-Net Realizable Value,Use of an Allowance,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,Instead of crediting the Inventory account for net realizable value adjustments, companies generally use an allowance account.,Allowance to reduce inventory to NRV 12,000,Loss due to decline to NRV12,000,Loss Method,Statement of Financial Position Presentation,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,Partial Statement,Recovery of Inventory Loss,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,Amount of write-down is reversed. Reversal limited to amount of original write-down. Continuing the Ricardo example, assume the net realizable value increases to $74,000 (an increase of $4,000). Ricardo makes the following entry, using the loss method.,Recovery of inventory loss 4,000,Allowance to reduce inventory to NRV 4,000,Recovery of Inventory Loss,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,Lower-of-Cost-or-Net Realizable Value,Allowance account is adjusted in subsequent periods, such that inventory is reported at the LCNRV.,Illustration 9-8,Inventory should not be reported at a value above original cost.,Decreases in the value of the asset and the charge to expense are recognized in the period in which the loss in utility occursnot in the period of sale. Increases in the value of the asset (in excess of original cost) recognized only at the point of sale. Inconsistency because a company may value inventory at cost in one year and at net realizable value in the next year. LCNRV values inventory conservatively. Net income for the year in which a company takes the loss is definitely lower. Net income of the subsequent period may be higher than normal if the expected reductions in sales price do not materialize.,Some Deficiencies:,Lower-of-Cost-or-Net Realizable Value,Evaluation of LCM Rule,LO 1 Describe and apply the lower-of-cost-or-net realizable value rule.,P9-1: Remmers Company manufactures desks. Most of the companys desks are standard models and are sold on the basis of catalog prices.。