Recent Articles

Disclosures Relating to Inventories

Under US GAAP and IFRS, companies are required to make the following disclosures about inventory. Accounting policies for measuring inventories, including cost formulas used Total carrying amount of inventories Carrying amount of inventories carried at fair value less...

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Inventory at Net Realizable Value

International and U.S. accounting standards require companies to carry inventory on the balance sheet at the lower of cost or market (LCM). With LCM an unrealized loss caused by a change that materially disconnects the in the fair market value of current inventory...

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Impact of Inventory Valuation Methods

We discussed the impact of LIFO and FIFO valuation methods on COGS, ending inventory, and gross profits under the increasing prices scenario under inflationary and deflationary scenarios. The following table summarizes the impact of LIFO and FIFO under the...

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Perpetual Vs. Periodic Inventory Systems

A company can account for changes in inventory using either periodic inventory system or perpetual inventory system. In the perpetual system, the company maintains a continuous record of inventory changes. All the purchases and sales of inventory are directly recorded...

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Inventory Accounting Analysis and Inflation/Deflation

Inflation and Inventory Accounting Analysis LIFO income statement in a rising price environment – LIFO method will lower reported margins.  Most recent goods are the most expensive and LIFO will calculate higher COGS and thus a lower gross profit. LIFO balance sheet...

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