accounting project - 7-9 The specific citation that...

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7-9 The specific citation that specifies these disclosure policies is FASB ACS 310–10– 50–9: “Receivables—Overall—Disclosure—Accounting Policies for Credit Losses and Doubtful Accounts.” FASB ACS 310–10–50–9 reads as follows: “In addition to disclosures required by this Subsection and Subtopic 450-20 , an entity shall disclose a description of the accounting policies and methodology the entity used to estimate its allowance for loan losses, allowance for doubtful accounts, and any liability for off-balance-sheet credit losses and related charges for loan, trade receivable or other credit losses in the notes to the financial statements. Such a description shall identify the factors that influenced management’s judgment (for example, historical losses and existing economic conditions) and may also include discussion of risk elements relevant to particular categories of financial instruments 8-12 1. Define the meaning of cost as it applies to the initial measurement of inventory.
2. Indicate the circumstances when it is appropriate to initially measure agricultural inventory at fair value.
The accounting basis of those kinds of inventories shall be their realizable value, calculated on the basis of quoted market prices less estimated direct costs of disposal. An example is freshly dressed meats produced in meat packing operations.
Exercise 8–12 (concluded) 3. What is a major objective of accounting for inventory?
4. Are abnormal freight charges included in the cost of inventory?

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