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CHAPTER-10-INVENTORIES.pptx - INVENTORI ES INVENTORIES ARE...

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INVENTORIES
INVENTORIESARE AS ASSETS:Held for sale in the ordinary course of business;In the process of production for such sale; orIn the form of materials or supplies to be consumed in theproduction process or in the rendering of services
RECOGNITIONWhen they meet the definition of inventoryObtained“legal title”.
MEASUREMENTInventories are measured at the lower ofcostandnet realizable value(LCNRV).COSTa.Purchase cost (net of trade discounts)– includes purchase price,import duties, non-refundable taxes, transport, handling cost & othercosts directly attributable to the acquisition of inventory.b.Conversion costs –includedirect labor & production overhead costsc.Other costsnecessary in bringing the inventories to their presentlocation and conditionNET REALIZABLE VALUE- is theestimated selling priceless theestimated cost ofcompletionand theestimated cost of disposal.
Goods included in the inventory:1.Goods owned and on hand2.Goods in transit and sold FOB Destination3.Goods in transit and purchased FOB Shipping point4.Goods out on consignmentConsignmentis the act of leaving goods with someone else tosellwhile retaining ownership until the goods are sold.

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Term
Spring
Professor
N/A
Tags
Supply Chain Management, Sales, Supply chain management terms, Shipping

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