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AC 550 Ch 8 Answers

Intermediate Accounting

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CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Inventory accounts; determining quantities, costs, and items to be included in inventory; the inventory equation; balance sheet disclosure. 1, 2, 3, 4, 5, 6, 8, 9 1, 3 1, 2, 3, 4, 5, 6, 10 1, 2, 3 1, 2, 3, 5, 11 2. Perpetual vs. periodic. 2 9, 13, 14, 17 4, 5, 6 3. Recording of discounts. 10, 11 7, 8 3 4 4. Inventory errors. 7 4 2, 3, 4, 5, 10, 11, 12 2 5. Flow assumptions. 12, 13, 16, 18, 20 5, 6, 7 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 1, 4, 5, 6, 7 5, 6, 7, 8 6. Inventory accounting changes. 18 7 6, 7, 10 7. Dollar-value LIFO methods. 14, 15, 17, 18, 19 8, 9 23, 24, 25, 26 1, 8, 9, 10, 11 8, 9 8-1
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ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives Bri ef Exe rcis es Exer cises Pro ble ms 1. Identify major classifications of inventory. 1 2. Distinguish between perpetual and periodic inventory systems. 2 4, 9, 13, 16, 17, 18, 20 4, 5, 6 3. Identify the effects of inventory errors on the financial statements. 4 5, 10, 11, 12 4. Understand the items to include as inventory cost. 1, 3 1, 2, 3, 4, 5, 6, 7, 8 1, 2, 3 5. Describe and compare the cost flow assumptions used to account for inventories. 5, 6, 7 13, 14, 15, 16, 17, 18, 19, 20, 22 1, 4, 5, 6, 7 6. Explain the significance and use of a LIFO reserve. 21 7. Understand the effect of LIFO liquidations. 8. Explain the dollar-value LIFO method. 8, 9 22, 23, 24, 25, 26 1, 8, 9, 10, 11 9. Identify the major advantages and disadvantages of LIFO. 10. Understand why companies select given inventory methods. 8-2
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ASSIGNMENT CHARACTERISTICS TABLE 8-3
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It e m Description Level of Difficu lty Time (minut es) E 8- 1 Inventoriable costs. Moder ate 15–20 E 8- 2 Inventoriable costs. Moder ate 10–15 E 8- 3 Inventoriable costs. Simple 10–15 E 8- 4 Inventoriable costs—perpetual. Simple 10–15 E 8- 5 Inventoriable costs—error adjustments. Moder ate 15–20 E 8- 6 Determining merchandise amounts—periodic. Simple 10–20 E 8- 7 Purchases recorded net. Simple 10–15 E 8- 8 Purchases recorded, gross method. Simple 20–25 E 8- 9 Periodic versus perpetual entries. Moder ate 15–25 E 8- 10 Inventory errors, periodic. Simple 10–15 E 8- 11 Inventory errors. Simple 10–15 E 8- 12 Inventory errors. Moder ate 15–20 E 8- 13 FIFO and LIFO—periodic and perpetual. Moder ate 15–20 8-4
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E 8- 14 FIFO, LIFO and average cost determination. Moder ate 20–25 E 8- 15 FIFO, LIFO, average cost inventory. Moder ate 15–20 E 8- 16 Compute FIFO, LIFO, average cost—periodic. Moder ate 15–20 E 8- 17 FIFO and LIFO; periodic and perpetual. Simple 10–15 E 8- 18 FIFO and LIFO; income statement presentation. Simple 15–20 E 8- 19 FIFO and LIFO effects. Moder ate 15–20 E 8- 20 FIFO and LIFO—periodic. Simple 10–15 E 8- 21 LIFO effect. Moder ate 10–15 E 8- 22 Alternate inventory methods—comprehensive. Moder ate 25–30 E 8- 23 Dollar-value LIFO. Simple 5–10 E 8- 24 Dollar-value LIFO. Simple 15–20 E 8- 25 Dollar-value LIFO. Moder ate 20–25 E 8- 26 Dollar-value LIFO. Moder ate 15–20 P 8- 1 Various inventory issues. Moder ate 30–40 P 8- 2 Inventory adjustments. Moder ate 25–35 8-5
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P 8- 3 Purchases recorded gross and net. Simple 20–25 P 8- 4
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