Weekly Assignment Solutions 7 - ACCG 611 Principles of...

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1 ACCG 611 Principles of Accounting Accounting for Inventory 5. Cottesloe Ltd has been using the FIFO costing method to account for inventories years. The company also has a policy of paying out all of its profits in cash divideare the likely effects, adverse or otherwise, of continuing these policies?
8.Why is the lower of cost and net realisable value rule required by accounting stanit permissible to revalue inventories upwards? If so, when? Are there any limits torevaluation?
2/AASB 102, as discussed in learning objective 5 of this chapter of the text.
2 Exercise 19.3 Lower of cost and net realisable value The inventory of Gordon Ltd contains the following items at 30 June 2015. Unit price Item type Quantity Cost Net realisable value 3011 2507 601 4500 2825 75 30 20 50 40 3.00 7.00 30.00 3.50 6.00 2.60 8.50 27.00 2.50 7.00 Required A. Determine the ending inventory value at 30 June 2015, applying the lower of cost and net realisable value rule to the individual items. B. What effect did application of the rule rather than cost have on the financial statements of the company?
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