Chapter 9 – Inventories: Additional Issues

Inventory

How do you determine the cost of inventory?  First, you decide on an inventory system, i.e., either periodic or perpetual.  Once that decision is made, the next thing that you do is decide whether you want to use specific identification, or a cost flow assumption.  If the decision is to use a cost flow assumption, then your choices are FIFO, LIFO or average.  All of this was covered in Chapter 8.

In this chapter, we turn our attention to additional issues related to inventories.  One of the issues deals with valuation.  Lower-of-cost-or-market is the method used for inventory valuation.  Another of the issues deals with estimation of inventory values.  Both the gross profit method and the retail inventory methods can be used for inventory estimation.  Finally, what happens if a company wants to change inventory methods or cost flow assumptions or if an error occurs in one or more of the accounts related to inventory?


Textbook readings: Chapter 9 – “Inventories: Additional Issues”, pages 458 – 486


Narrated PowerPoint Lectures: The lecture  for this chapter has been broken into two parts.  Part 1 focuses on the basics of inventory valuation.  Part 2 looks at the different cost flow assumptions


Narrated Solutions to Suggested End of Chapter Exercises and Problems

Publisher solutions to suggested end of chapter exercises and problems