What type of inventories do entities hold?

Raw Materials Work-in-progress Finished Goods

How is inventory valued?

The lower cost and Net Realisable Value

Costs incurred when converting raw materials into finished goods

What costs cannot be included in the cost of inventory?

Abnormal amount of waste materials, labour, or prod. costs Storage Costs Admin Costs Selling Costs

The selling price less costs that have been incurred in achieving the selling price

What are the three costs formulas to calculate inventory?

FIFO Weighted Average Cost LIFO

Goods are issued based on the cost of the oldest goods

Weighted Average Costs

The average cost per unit of all goods on hand is calculated each time new goods or services are brought in

Exclude the following from asset cost

Cost of opening the facility Cost of introducing a new g/s Admin Costs Other general o/hs Initial operating losses Cost of relocating

Depreciate the asset over it's useful life Pick a pattern that best suits the asset in making the most profit

Depreciates Annually Assets must be revalued regularly

It's held for it's ability to generate rental income and/or capital appreciation

When is an investment property recognised?

Cost of investment property can be measured reliably It is probable that the investor will receive benefits out of it

What costs can only be included in initial recognising cost of investment property?

Purchase price of property Direct expenditure such as legal fees, property taxes and transaction costs

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AC1104

Topic 3

Term	Definition
What type of inventories do entities hold?	Raw Materials Work-in-progress Finished Goods
How is inventory valued?	The lower cost and Net Realisable Value
Conversion Costs	Costs incurred when converting raw materials into finished goods
What costs cannot be included in the cost of inventory?	Abnormal amount of waste materials, labour, or prod. costs Storage Costs Admin Costs Selling Costs
NRV	The selling price less costs that have been incurred in achieving the selling price
Inventory is written down to what?	To NRV by item-by-item basis
What are the three costs formulas to calculate inventory?	FIFO Weighted Average Cost LIFO
FIFO	Goods are issued based on the cost of the oldest goods
Weighted Average Costs	The average cost per unit of all goods on hand is calculated each time new goods or services are brought in
Exclude the following from asset cost	Cost of opening the facility Cost of introducing a new g/s Admin Costs Other general o/hs Initial operating losses Cost of relocating
What choice of accounting policy does an entity have in depr?	Cost Model Revaluation Model
Cost Model	Depreciate the asset over it's useful life Pick a pattern that best suits the asset in making the most profit
Revaluation Model	Depreciates Annually Assets must be revalued regularly
Investment Property	It's held for it's ability to generate rental income and/or capital appreciation
When is an investment property recognised?	Cost of investment property can be measured reliably It is probable that the investor will receive benefits out of it
What costs can only be included in initial recognising cost of investment property?	Purchase price of property Direct expenditure such as legal fees, property taxes and transaction costs

Created by: peadarbailey1206

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