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Methods : Fifo, Lifo, weighed average Methods : Fifo, Identical (you must use it if its possible), weighed average Methods : Lifo, Hifo, Lofo, Kifo Methods : Fifo, Identical (you must use it if its possible), weighed average, Lifo Methods : Fifo, weighed average, Identical (you must use it if its possible),
Details Austria
Do you have "valuation at the lower of cost principle"? Yes if the value of an inventory piece decreases under the market price you have to take the lower one. How do you calculate the costs of goods sold? Every sales transaction or once a year? During the year we book all purchases to an expense account and we book the adjustment once a year. Which valuation methods are allowed for valuation of the stock? identical or average or FiFo. If the identical method is possible we must use it. Is a perpetual inventory allowed? Is it necessary to make a physical inventory count? A perpetual inventory is allowed if you have an inventory management system. How do treat the inventory variance (like theft or breakage) ? We book it to a special expense account.
How are finished goods or goods in process valuated ? cost of goods manufactured without imputed costs
Details Denmark
Do you have "valuation at the lower of cost principle"? Always cost price.
How do you calculate the costs of goods sold? Every sales transaction or once a year? Either every sales transaction or once a year depending on the ICT system .
Which valuation methods are allowed for valuation of the stock? The FIFO-method for inventory statement can be accepted. The LIFO-method can however not be accepted for the assessment of the inventory
Details Germany
Do you have "valuation at the lower of cost principle"? Yes if the devaluation is permanent How do you calculate the costs of goods sold? Every sales transaction or once a year? During the year we book all purchases to an expense account and we book the adjustment once a year. Which valuation methods are allowed for valuation of the stock? Only average method or LiFo and no FiFo.
Is a perpetual inventory allowed? Is it necessary to make a physical inventory count? A perpetual inventory is allowed if you have an inventory management system.
How do treat the inventory variance (like theft or breakage) ? We book it to a special expense account. How are finished goods or goods in process valuated ? cost of goods manufactured without imputed costs
Details Estonia
Do you have "valuation at the lower of cost principle"? Inventories shall be measured in the balance sheet at the lower of cost or net realisable value.
How do you calculate the costs of goods sold? Every sales transaction or once a year? Usually we have perpetual inventory system, it means we show at the same time cost of goods sold and sales revenue. If enterprises use periodic inventory system, the cost of goods sold is calculated
Which valuation methods are allowed for valuation of the stock? Specific identification, FIFO, weighed average. Is a perpetual inventory allowed? Is it necessary to make a physical inventory count? Perpetual inventory system is allowed. It is necessary to have a physical inventory under both methods (periodic and perpetual system). How do treat the inventory variance (like theft or breakage) ? It is treated as expense. How are finished goods or goods in process valuated ? As the other items of inventories
Details Finland
Do you have "valuation at the lower of cost principle"? The lower of cost.
How do you calculate the costs of goods sold? Every sales transaction or once a year? Every sales transactions
Which valuation methods are allowed for valuation of the stock? We will value by using FIFO, LIFO, identical or average, many possibilities are aloud. For same stock we use the same method. Is a perpetual inventory allowed? Is it necessary to make a physical inventory count? Perpetual inventory system is allowed. It is necessary to have a physical inventory under both methods (periodic and perpetual system). How do treat the inventory variance (like theft or breakage) ? We correct the value of stock in our bookkeeping by these variances .
How are finished goods or goods in process valuated ? Variable costs or variable costs + fixed costs (of manufactured goods).
Details Hungary
Do you have "valuation at the lower of cost principle"? Yes if the value of an inventory piece decreases under the market price you have to take the lower one. How do you calculate the costs of goods sold? Every sales transaction or once a year? 2 possibilities: First to inventory and then to expenses or immediately to purchase expenses. Which valuation methods are allowed for valuation of the stock? Average method or FiFo. Is a perpetual inventory allowed? Is it necessary to make a physical inventory count? A perpetual inventory is allowed if you have an inventory management system. How do treat the inventory variance (like theft or breakage) ? We book it to a special expense account. How are finished goods or goods in process valuated ? cost of goods manufactured without imputed costs
Details UK
Do you have "valuation at the lower of cost principle"? We value the stock at the lower of cost or net realisable value.
How do you calculate the costs of goods sold? Every sales transaction or once a year? Sales + Closing Stock Less Opening Stock.
Which valuation methods are allowed for valuation of the stock? LIFO, FIFO and AVCO (see following pages). Is a perpetual inventory allowed? Is it necessary to make a physical inventory count? A perpetual inventory is allowed if you have an inventory management system . How do treat the inventory variance (like theft or breakage) ? We post it to a special expense account . How are finished goods or goods in process valuated ? Cost of goods manufactured
What is FIFO ?
This is the most common method of determining stock valuation. It makes the assumption that the first stock received will be the first that is sold.
Older stocks are assumed to be sold before the most recent stock. The stock valuation then is made on only the most recent stock.
Choosing a Method
Once a method for stock valuation has been selected a business should continue to use that method unless there is a very good reason to change the method.
What is AVCO ?
The average cost of the items purchased is calculated at the end of the period.
When new stocks are received then a new average cost must be calculated.
Sues Bookstore is making a stock valuation for the title Accounting Concepts and Principles
In week 1 she bought 100 copies at 2-00 and sold 80 copies at 3-50p In week 2 she bought 200 copies at 2-10 and sold 160 copies at 3-75
Stock should be valued at the lower of cost and net realisable value.
Details IFRS
Do you have "valuation at the lower of cost or market principle"?
In accordance with IAS 2: Generally inventories (stocks) are measured at the lower of cost and net realisable value. If the net realisable value of an item that has been written down subsequently increases, then the write-down is reversed.
Which valuation methods are allowed for valuation of the stocks? In accordance with IAS 2: When items of inventories (stocks) are not interchangeable, cost is determined on a individual basis. A cost formula may be used when there are many interchangeable items. The cost formula used should be FIFO or weighted average cost. Other cost formulas, such as the standard cost or retailed method, may be used when the result approximate actual cost.