Week 8 tutorial solutions.pdf - Tutorial 8(Week beginning 16th September 2019 Topic 7 Inventory(Part 2 AASB102 \u2013 cost of inventory cost-flow

Week 8 tutorial solutions.pdf - Tutorial 8(Week beginning...

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Tutorial 8 (Week beginning 16 th September 2019) Topic 7: Inventory (Part 2): AASB102 cost of inventory, cost-flow assumptions, lower of cost and NRV, inventory writedowns SOLUTION TO HOMEWORK QUESTIONS 1. Q5.7 (p. 322) Lee Ltd is using the FIFO method of inventory costing and Lam Ltd is using the LIFO method. Under FIFO, the latest goods purchased remain in inventory. Thus, the inventory on the statement of financial position should be close to current costs. The reverse is true of the LIFO method. Lee Ltd will have the lower gross profit because cost of goods will include a higher proportion of goods purchased at earlier (higher) costs. 2. a) Explain the components of the cost of inventory according to AASB102 b) Briefly distinguish between the following costing methods: Specific identification,

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