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13 Cards in this Set
- Front
- Back
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What is included in inventory? |
Raw materials, work in progress, finished goods held for sale |
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Define cost |
Expenditure which incurred when bringing the inventories to the present location and condition |
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3 types of costs: |
1. Cost of purchase: import duty, transport, discounts 2. Cost of conversion: direct labor, production overheads 3. Other costs |
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What costs are not included? |
Storage cost, administrative overheads (unrelated), selling costs |
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Inventory should be valued at the lower of |
Costs and Net realisable value |
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How is NRV calculated? |
Selling price - cost to complete - cost to sell |
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Define asset |
A resource controlled by an entity, from which future economic benefits will flow |
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Name three criteria for PPE |
Tangible items Held for use Expected to be used longer than one period |
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Describe the accounting treatment for PPE (3 steps) |
Recognition (obtaining the asset) Determining CA Recognition of depreciation charges and impairment losses |
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Name the costs that should be included when capitalising the asset |
Acquisition cost Cost of transportation to present location Any costs attributable to bringing the asset into working condition and intended use Costs of safety and site preparation Cost of dismantling and removal |
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What are the two models to measure PPE? |
The cost model and the Revaluation model |
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Describe how the Revaluation model works in practice |
Assets are carried at Fair Value Revaluations are made regularly (not necessarily every period) |
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How are decreases and increases in value treated? |
Decreases are recognized as an expense Increase is recognized in OCI and Equity: revaluation surplus Decrease: any amount previously recorded in Revaluation surplus is reduced, and the corresponding amount recognized in OCI |
