Question

Jones Co. is in a technology-intensive industry. Recently, oneof its competitors introduced a new product with technology thatmight render obsolete some of Jones's inventory. The accountingstaff wants to follow the appropriate authoritative literature indetermining the accounting for this significant market event.

Instructions

(a) Identify the primary authoritative guidance for theaccounting for inventories.

(b) List three types of goods that are classified as inventory.What characteristic will automatically exclude an item from beingclassified as inventory?

(c) Define “market” as used in the phrase“lower-of-cost-or-market.”

(d) Explain when it is acceptable to state inventory above costand which industries allow this practice.