Module 8: Inventories
This type of inventory is comprised of goods that were purchased from a supplier in a finished form.
What is merchandising inventory?
When the expected benefit of unsold inventory is estimated to have fallen below its cost, companies must reduce its value in the balance sheet. This is the name given to the adjusting entry made to reduce the value of inventory in this situation.
What is an inventory write-down?
These are three examples of property, plant, and equipment assets
What are:
* Furniture & fixtures,
* equipment,
* buildings,
* land,
* natural resources?
This type of inventory is produced and sold to wholesalers, retailers, and consumers.
What is merchandising inventory?
If a company uses the FIFO or average cost, cost flow assumption, it must use this methodolgy to test inventory for impairment.
What is the lower of cost or net realizable value (LCNRV)?
In addition to purchase price, these two items can also be included in the initial value of PP&E and intangible assets.
What are costs related to location and condition?
When a company uses the LIFO cost flow assumption, it sometimes must use older layers of inventory that have lower per unit cost. This lower per unit cost results in a mechanical decrease in COGs and an increase in profit. This phenomenon is called _____ .
What is a a LIFO liquidation?
If a company uses the LIFO or retail inventory methods, it must use this methodolgy to test inventory for impairment.
What is the lower of cost or market (LCM) method?
This asset results from merger and acquisition (M&A) transactions and represents the difference between acquisition price and the fair value of acquired net assets.
What is goodwill?
This is an inventory costing method comprised of layers of dollar value and using cost indices to adjust for changes in price levels over time.
What is dollar-value LIFO?
This methodology estimates ending inventory value using information that is know from available accounting records: Cost of goods available for sale and cost of goods sold.
What is the gross profit method?
GAAP requires that all research and development costs (R&D), with three exceptions, be _________.
What is expensed?
This represents an adjustment factor used to translate FIFO to LIFO.
What is a LIFO reserve?
In the lower of cost or market (LCM) method, these are the three data points used to develop an estimate of market value.
1. Net realizable value (NRV)
2. NRV - normal profit
3. Replacement cost
This is the name given to a transaction in which a company acquires a new asset by giving up an existing asset.
What is an asset exchange?