ACC 311 Class 12 PPT Ch 7 no notes

Possible possible lifo conformity rule if last in

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Unformatted text preview: out is used on the income tax return, it must also be used to calculate inventory and cost of goods sold for financial statements. 7-14 Valuation at Lower of Cost or Market Ending inventory is reported at the Ending inventory is reported at the Ending lower of cost or market (LCM).. llower of cost or market (LCM) lower ower Replacement Cost Replacement Cost Replacement The current purchase price The current purchase price The The for identical goods. ffor identical goods. for or The company will recognize a “holding” loss in the current The company will recognize a “holding” loss in the current period rather than the period in which the item is sold. period rather than the period in which the item is sold. This practice is conservative.. This practice is conservative 7-15 Valuation at Lower of Cost or Market Ite m Pe ntium chips Disk drive s Qua ntity 1,000 400 Cost $ 250 100 Re pla ce m e nt Cost $ 200 110 LCM $ 200 100 Tota l LCM $ 200, 000 40, 000 7-16 Perpetual and Periodic Inventory Systems Provides up-to-date Provides up-to-date Provides up-to-date Provides up-to-date inventory records. iinventory records. inventory nventory Perpetual Perpetual Perpetual System System System System Provides up-to-date Provides up-to-date Provides cost of sales records. cost of sales records. In a periodic inventory system, ending inventory and cost of goods sold are determined at the end of the accounting period based on a physical count. 7-17 Perpetual...
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This note was uploaded on 01/30/2014 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas at Austin.

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