Professional Documents
Culture Documents
VALUATION
FINACC 1
REFERENCES
TOA VOL1
VALIX
PAS/IAS 2
PRACACC 1
OF INVENTORY
A.
PAS 2
comprises:
during the
5,000,000
500,000
400,000
1,000,000
100,000
600,000
200,000
300,000
250,000
6,700,000
during the
5,000,000
500,000
400,000
1,000,000
100,000
600,000
200,000
300,000
250,000
6,700,000
5,200,000
8,000,000
(2,400,000)
5,600,000
5,200,000
8,000,000
(2,400,000)
5,600,000
B.
PAS 2
B.
PAS 2
C.
PAS 2
METHODS
FIFO
the goods first purchased are first sold.
the goods remaining are most
recently purchased/produced
in accordance with
ordinary merchandising procedure
FAVORS
THE
BALANCE
SHEET
inventory at current replacement cost
FIFO
FIFO
FAVORS THE BALANCE SHEET:
FIFO
OBJECTION:
FIFO
EFFECT:
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Units
800
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Date
January 1
January 8
January 18
January 22
January 31
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Unit
Cost
200
Units
800
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Units
500
Unit Cost
Total Cost
Date
January 1
January 8
January 18
January 22
January 31
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Unit
Cost
200
Units
300
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Units
Unit Cost
Total Cost
500
200
100,000
800
Date
January 1
January 8
January 18
January 22
January 31
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Unit
Cost
200
Units
0
Total
Cost
160,000
Sales
(in units)
500
200
210
147,000
800
500
220
110,000
Units
Unit Cost
Total Cost
500
200
100,000
300
500
200
210
60,000
105,000
Date
January 1
January 8
January 18
January 22
January 31
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Unit
Cost
200
Units
0
Total
Cost
160,000
Sales
(in units)
500
200
210
147,000
800
500
220
110,000
Units
Unit Cost
Total Cost
500
200
100,000
300
500
200
210
60,000
105,000
265,000
Date
January 1
January 8
January 18
January 22
January 31
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Unit
Cost
200
Units
800
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Units
200
500
700
Unit Cost
210
220
Total Cost
42,000
110,000
152,000
Date
Transaction
January 1
Beg. Bal.
January 8
Sale
January 18
Purchase
January 22
Sale
January 31
Purchase
Ending Inventory
Units
800
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
700
220
110,000
152,000
160,000
257,000
417,000
(152,000)
265,000
265,000
Inventory January 31
Cost of Goods Sold
Inventory Feb 1
Net Purchases
152,000
265,000
160,000
257,000
OR:
Dr.
Cr.
Inventory January 31
Income Summary
152,000
152,000
Units
700
Purchases
Unit
Cost
210
Total
Cost
500
220
Total
Cost
500
200
100,000
300
500
200
210
60,000
105,000
147,000
Jan 22
Jan 31
Units
Sales
Unit
Cost
110,000
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
210
210
220
42,000
42,000
110,000
Units
Units
700
Purchases
Unit
Cost
210
Total
Cost
500
220
Total
Cost
500
200
100,000
300
500
200
210
60,000
105,000
147,000
Jan 22
Jan 31
Units
Sales
Unit
Cost
110,000
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
210
210
220
42,000
42,000
110,000
Units
Units
700
Purchases
Unit
Cost
210
Total
Cost
500
220
Total
Cost
500
200
100,000
300
500
200
210
60,000
105,000
147,000
Jan 22
Jan 31
Units
Sales
Unit
Cost
110,000
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
210
210
220
42,000
42,000
110,000
Units
100,000
165,000
265,000
Dr.
Cr.
xxxxx
xxxxx
100,000
100,000
WTD AVE
WEIGHTED AVERAGE UNIT COST FORMULA
Transaction
Beginning Balance
Purchase
Purchase
Units
800
700
500
Unit
Cost
200
210
220
Total
Cost
160,000
147,000
110,000
Units
800
700
500
2,000
Unit
Cost
200
210
220
Total
Cost
160,000
147,000
110,000
417,000
Units
800
700
500
2,000
Unit
Cost
200
210
220
Total
Cost
160,000
147,000
110,000
417,000
208.50
145,950
Units
800
700
500
2,000
Unit
Cost
200
210
220
Total
Cost
160,000
147,000
110,000
417,000
208.50
145,950
160,000
257,000
417,000
(145,950)
271,050
208.50
145,950
160,000
257,000
417,000
(145,950)
271,050
WTD AVE
When weighted average is used in conjunction with perpetual system,
Transaction
Balance
Sale
Balance
Units
800
(500)
300
Unit Cost
200
200
200
Total Cost
160,000
(100,000)
60,000
Transaction
Balance
Sale
Balance
Purchase
Units
800
(500)
300
700
Unit Cost
200
200
200
210
Total Cost
160,000
(100,000)
60,000
147,000
Transaction
Balance
Sale
Balance
Purchase
Total
Units
800
(500)
300
700
1000
Unit Cost
200
200
200
210
Total Cost
160,000
(100,000)
60,000
147,000
207,000
Transaction
Balance
Sale
Balance
Purchase
Total
Units
800
(500)
300
700
1000
Unit Cost
200
200
200
210
207
Total Cost
160,000
(100,000)
60,000
147,000
207,000
Transaction
Balance
Sale
Balance
Purchase
Total
Sale
Balance
Units
800
(500)
300
700
1000
(800)
200
Unit Cost
200
200
200
210
207
207
207
Total Cost
160,000
(100,000)
60,000
147,000
207,000
(165,600)
41,400
Transaction
Balance
Sale
Balance
Purchase
Total
Sale
Balance
Purchase
Units
800
(500)
300
700
1000
(800)
200
500
Unit Cost
200
200
200
210
207
207
207
220
Total Cost
160,000
(100,000)
60,000
147,000
207,000
(165,600)
41,400
110,000
Transaction
Balance
Sale
Balance
Purchase
Total
Sale
Balance
Purchase
Total
Units
800
(500)
300
700
1000
(800)
200
500
700
Unit Cost
200
200
200
210
207
207
207
220
Total Cost
160,000
(100,000)
60,000
147,000
207,000
(165,600)
41,400
110,000
151,400
Transaction
Balance
Sale
Balance
Purchase
Total
Sale
Balance
Purchase
Total
Units
800
(500)
300
700
1000
(800)
200
500
700
Unit Cost
200
200
200
210
207
207
207
220
216.29
Total Cost
160,000
(100,000)
60,000
147,000
207,000
(165,600)
41,400
110,000
151,400
Transaction
Balance
Sale
Balance
Purchase
Total
Sale
Balance
Purchase
Total
Units
800
(500)
300
700
1000
(800)
200
500
700
Unit Cost
200
200
200
210
207
207
207
220
216.29
Total Cost
160,000
(100,000)
60,000
147,000
207,000
(165,600)
41,400
110,000
151,400
265,600
PROS
CONS
LIFO
the goods last purchased are first sold.
the goods remaining are those
LIFO
FAVORS THE INCOME STATEMENT:
LIFO
FAVORS THE INCOME STATEMENT:
LIFO
OBJECTION:
LIFO
OBJECTION:
LIFO
EFFECT:
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Units
800
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Units
800
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Units
800
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
110,000
Units
700
Unit Cost
200
Total Cost
140,000
Transaction
Beg. Bal.
Sale
Purchase
Sale
Purchase
Units
800
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
500
700
210
147,000
800
500
220
700
200
110,000
140,000
160,000
257,000
417,000
(140,000)
277,000
Unit
Cost
200
Total
Cost
160,000
Sales
(in units)
Transaction
Units
Beg. Bal.
800
Sale
500
Inventory
31 210 140,000
Purchase January
700
147,000
SaleIncome Summary
140,000 800
Purchase
500
220
110,000
700
200
140,000
160,000
257,000
417,000
(140,000)
277,000
Units
700
Purchases
Unit
Cost
210
Total
Cost
500
220
Total
Cost
500
200
100,000
700
100
210
200
147,000
20,000
147,000
Jan 22
Jan 31
Units
Sales
Unit
Cost
110,000
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
200
200
220
40,000
40,000
110,000
Units
Units
700
Purchases
Unit
Cost
210
Total
Cost
500
220
Total
Cost
500
200
100,000
700
100
210
200
147,000
20,000
147,000
Jan 22
Jan 31
Units
Sales
Unit
Cost
110,000
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
200
200
220
40,000
40,000
110,000
Units
Units
700
Purchases
Unit
Cost
210
Total
Cost
500
220
Total
Cost
500
200
100,000
700
100
210
200
147,000
20,000
147,000
Jan 22
Jan 31
Units
Sales
Unit
Cost
110,000
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
200
200
220
40,000
40,000
110,000
Units
100,000
167,000
267,000
Units
Purchases
Unit
Cost
Jan 1
Jan 8
Jan 18
Ending Inventory
210
COGS700
Total
Cost
500
140,000
147,000
277,000
Jan 22
Jan 31
Units
700
100
500
220
Sales
Unit
Cost
Total
Cost
800
300
300
700
Balance
Unit
Cost
200
200
200
210
Total
Cost
160,000
60,000
60,000
147,000
200
200
500
200
200
220
40,000
40,000
110,000
Units
200
100,000
Ending
Inventory
COGS
210
200
147,000
20,000
110,000
150,000
267,000
100,000
167,000
267,000
looking back
C.
PAS 2
what is
SPECIFIC
IDENTIFICATION
what is
SPECIFIC
IDENTIFICATION
what is
SPECIFIC
IDENTIFICATION
what is
SPECIFIC
IDENTIFICATION
what is
SPECIFIC
IDENTIFICATION
Lets say that the costs of the finished furniture are as follows:
P 20,000
P 100,000
P 10,000
P 50,000
and 1
. How much is my
Lets say that the costs of the finished furniture are as follows:
P 20,000
P 100,000
P 10,000
P 50,000
and 1
. How much is my
Lets say that the costs of the finished furniture are as follows:
P 20,000
P 100,000
P 10,000
P 50,000
on
Lets say that the costs of the finished furniture are as follows:
P 20,000
P 100,000
P 10,000
P 50,000
on
PROS
CONS
NET
REALIZABLE
VALUE
NET
REALIZABLE
VALUE
NET
REALIZABLE
VALUE
NET
REALIZABLE
VALUE
DETERMINATION
OF NRV
DETERMINATION
OF NRV
DETERMINATION
OF NRV
DETERMINATION
OF NRV
DETERMINATION
OF NRV
Units
Unit Cost
NRV
1,000
3,000
2,000
11
23
30
10
25
32
5,000
3,000
40
50
38
52
2,000
2,000
75
80
73
83
Total Cost
NRV
Lower
11,000
69,000
60,000
10,000
75,000
64,000
10,000
69,000
60,000
200,000
150,000
190,000
156,000
190,000
150,000
150,000
160,000
800,000
146,000
166,000
146,000
160,000
785,000
785,000
NRV
Lower
785,000
Materials
#1
11,000
10,000
10,000
#2
69,000
75,000
69,000
#3
60,000
64,000
60,000
Dr.
December 31, 2011 800,000
Goods inInventory
process
X
200,000
190,000800,000
190,000
Cr.
Income Summary
Y
150,000
156,000
150,000
FinishedLoss
goodson Inventory Writedown
Dr.
15,000
A
150,000
Cr.
Allowance for Inv.
Writedown146,00015,000146,000
B
160,000
166,000
160,000
Total
800,000
785,000
800,000
(15,000)
785,000
990,000
990,000
Allowance Method
Cost
NRV
Required allowance for 2012
2011 Allowance Balance
Decrease in Allowance
1,000,000
990,000
10,000
(15,000)
(5,000)
Dr.
Cr.
STANDARD
COSTS
STANDARD
COSTS
STANDARD
COSTS
relative sales
PRICE METHOD
relative sales
PRICE METHOD
ILLUSTRATION
Products A, B, and C are purchased at a basket price of PHP
3,000,000. Assume that the said products have the following
sales price: A: PHP 500,000; B: PHP 1,500,000; and C: PHP
3,000,000.
relative sales
PRICE METHOD
500,000
1,500,000
3,000,000
5,000,000
5/50 x 3,000,000
300,000
15/50 x 3,000,000
900,000
30/50 x 3,000,000 1,800,000
3,000,000
PURCHASE COMMITMENTS
Are obligations of the entity to acquire certain goods
sometime in the future at a fixed price and fixed
quantity
A purchase contract has already been made for
future delivery of goods fixed in price and in
quantity
PURCHASE COMMITMENTS
If there is a decline in purchase price after a purchase
commitment has been made, a loss is recorded in the
period of the price decline.
The fall in purchase price as against the agreed price
is accounted for as debit to loss on purchase
commitments and credit to an estimated liability.
50,000
420,000
30,000
50,000
500,000
Dr. Purchases
480,000
Estimated liability for purchase
commitment
50,000
Cr.
Accounts payable
500,000
Gain on purchase commitment 30,000
DISCLOSURES IN F/S
DISCLOSURES IN F/S
SPECIAL
CASES
Commodities of Broker-Traders
Commodities of Broker-Traders
END.