2011 Financial 4 Text Updates - This first page gives a...

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This first page gives a listing of the corrected lecture text pages that follow. Print these corrected pages and insert in the lecture text. FINANCIAL Date Added Lecture Page Number Description 03/17/2011 F-4 28 Text change 03/17/2011 F-4 43 Add text 03/17/2011 F-4 46 Correction of topic reference 03/24/2011 F-4 22 Delete text 03/24/2011 F-4 23 Add text 03/24/2011 F-4 54 Change text 04/18/2011 F-4 23 Add text
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Financial 4 Becker Professional Education | CPA Exam Review F4- 28 ©2010 DeVry/Becker Educational Development Corp. All rights reserved. EXAMPLE—WEIGHTED AVERAGE METHOD Facts and Requirement: Assume the same information for Helix Corporation as in the example for FIFO (above). What are the amounts of ending inventory and cost of goods sold under the weighted average method? Solution: Unit Cost Units Purchased Total $4.25 4,000 $ 17,000 4.50 2,000 9,000 4.75 3,000 14,250 Total 9,000 $40,250 Weighted average cost per unit = $4.4722 ($40,250/9,000) Cost of goods sold = $17,889 (4,000 units × $4.4722) Ending inventory = $22,361 (5,000 units × $4.4722) D. Moving Average Method The moving average method computes the weighted average cost after each purchase by dividing the total cost of inventory available after each purchase (inventory plus current purchase) by the total units available after each purchase. The moving average is more current than the weighted average. A perpetual inventory system is necessary to use the moving average method. EXAMPLE—MOVING AVERAGE METHOD Facts and Requirement: Assume the same information for Helix Corporation as in the example for FIFO (above). What are the amounts of ending inventory and cost of goods sold under the moving average method? Solution: Purchases/(Sales) Inventory Balances (rounded) Quantity Cost Total Quantity Average Cost Total 4,000 $4.25 $17,000 4,000 $4.25 $17,000 (3,000) $4.25 ($12,750) 1,000 $4.25 $4,250 2,000 $4.50 $9,000 3,000 $4.4167 1 $13,250 (1,000) $4.4167 ($4,417) 2,000 $4.4167 $8,833 3,000 $4.75 $14,250 5,000 $4.6166 2 $23,083 1 Weighted average cost per unit = ($4,250 + $9,000) / 3,000 = $4.4167 2 Weighted average cost per unit = ($8,833 + $14,250) / 5,000 = $4.6166 Cost of goods sold is $17,167 ($12,750 + $4,417) Ending inventory is $23,083
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Becker Professional Education | CPA Exam Review Financial 4 ©2010 DeVry/Becker Educational Development Corp. All rights reserved. F4- 43 IV. VALUATION OF FIXED ASSETS UNDER IFRS Under IFRS, fixed assets are initially recognized at the cost to acquire the asset. Subsequent to acquisition, fixed assets can be valued using the cost model or the revaluation model. A. Cost Model Under the cost model, fixed assets are reported at historical cost adjusted for accumulated depreciation and impairment. Cost model carrying value = Historical cost - Accumulated depreciation - Impairment
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This note was uploaded on 09/25/2011 for the course ACCOUNTING AC591 taught by Professor W during the Spring '11 term at Keller Graduate School of Management.

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2011 Financial 4 Text Updates - This first page gives a...

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