Inventory
When the number of units sold will be greater than the number of units purchased. This makes it so that previous years' layers of inventory are recorded as sold.
What is LIFO Liquidation?
Name 2 examples of P,P,E
Land, Buildings, Equipment, Machinery, Furniture, Autos, and Trucks
Can inventory that is written down be written back up?
No
Assets given to a company without the company paying for them. Usually is an enticement to do something that benefits the donor.
What are donated assets?
What are the three cost flow assumptions?
What is average cost, FIFO, and LIFO?
The same inventory cost flow that is used on the financial statements must be used on the income tax return.
What is LIFO conformity rule?
How is net realizable value calculated?
NRV= Estimated selling price- costs of completion, disposal, and transportation
Can a company switch between depreciation methods?
Yes
Revenue is ____(ed) when accounting for donated assets
Credit(ed)
What are the two types of inventory methods?
What are periodic and perpetual?
How do we calculate COGS using the periodic inventory method?
COGS= Beg. Inv. + Net Purchases - End. Inv.
Inventory is ____(ed) when NRV is lower than cost
Reduce(d)
What is the process for accounting for impairment losses?
Debit Loss on Impairment
Credit Asset
Donated assets are recorded on ___ values
Fair
An existing legal obligation associated with the disposition/ retirement of a tangible, long-lived asset
What is an Asset Retirement Obligation?
How do we calculate purchases under the periodic inventory?
Record all aspects of purchases in temporary accounts
All expenditures necessary to get the asset in condition and location for its intended use
What is capitalized portion of P,P,E acquisition costs?
What do you need to compute an asset's depreciation rate?
1/number of years expected to have asset
multiply by cost
How are R&D costs treated when an asset is purchased for a single R&D project
Expensed immediately in the current year
When ending inventory exceeds beginning inventory, a new LIFO layer is added or increased in retail prices.
What is dollar-value LIFO?
Give the inventory transactions for periodic/ perpetual (split between both teams)
Refer to Answer Sheet
If cost is lower than NRV, what entry(ies) are required
No adjusting entries necessary
What are the 4 different depreciation methods?
What are Straight Line, Double Declining, Units of Production, and Sum of Years Digits
How are R&D costs treated when an asset is purchased for more than one R&D project
Depreciation or amortization of the asset is included in R&D expense in the current and future periods
What is the effect that impairment losses have on the financial statements?
Ultimately, reduce Net Income