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20_Retail_Inventories_1 - the method that most clearly...

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Click to edit Master subtitle style Retail Inventories – 1 Accountancy 301 Measurement & Disclosure Professor Clifton Brown 20 November 3, 2010
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Recognition & measurement Asset attributes (element  definition) Probable future  economic benefits Obtained/con- trolled by the entity Result of past  transactions/ events Relevant/reliable measurement attribute Lower of acquisition cost or market Estimation issues Cost flow Market
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Estimation of “market” GAAP FASB Codification 330-10- 35 IFRS IAS 2 ¶ 28 Ceiling = Net realizable value Floor = Net realizable value – Normal  profit margin  Replacement cost Net realizable value
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Cost flow estimation GAAP FASB Codification 330-30- 9 Any one of several assumptions  such as FIFO, average, and LIFO The major objective is selecting 
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Unformatted text preview: the method that most clearly reflects periodic income IFRS IAS 2 ¶ 23 Items not ordinarily interchangeable … specific identification Otherwise, FIFO or weighted average Inventory turnover Average inventory Cost of goods sold Best Buy 7.33 (49.8 days) RadioShack 3.54 (103.1 days) Safeway 11.43 (31.9 days) What would be the effect if, say, Best Buy inventories were understated by 10%? Next class – Monday, Nov 8 Wed, Nov 10 – Retail Inventories – 2 Readings Revsine Chapter 9 (part) IAS 2 (indicated ¶) Case Samuels Electronics Store (remainder) Presentations Teams 1 & 2 Write ups Due Saturday Midterm Exam 2 Team 2 – Target Corp....
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