Accounting 201 accounting for inventories
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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 âmarketâ as used in the phraseâlower-of-cost-or-market.â
(d) Explain when it is acceptable to state inventory above costand which industries allow this practice.
Which is not an example of a change in accounting principle?
A change in the useful lifeof a depreciable asset A change from LIFO to FIFO forinventory costing A change to the full costingmethod in the extractive industries A change from the cost methodto the equity method of accounting for investments