Acc641_Inventories - Copy - Inventories IAS 2 1 Learning...

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Inventories IAS 2 1
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Learning Objectives Understand the costs of inventory, including inventories of service providers Determine inventory costs using methods allowed by IAS 2 Understand net realizable value Compare IAS 2 to U.S. GAAP on inventories 2
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Objective of FASB ASC 330 FASB ASC 330-10-10-1 A major objective of accounting for inventories is the proper determination of income through the process of matching appropriate costs against revenues. 3
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Objectives of IAS 2 -- Inventories The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write- down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories. 4
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Inventories are assets: Held for sale in the ordinary course of business; Being produced for sale in the ordinary course of business; In the form of materials or supplies to be used in production or to provide services. Inventories are classified as current assets on the face of the balance sheet. Entities are required to disclose the composition of inventory in the financial statements. 5
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Acc641_Inventories - Copy - Inventories IAS 2 1 Learning...

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