Textbook Notes (367,766)
Canada (161,379)
York University (12,778)
Accounting (236)
ACTG 3110 (19)

ACTG 3110 - Inventories and Cost of Sales

5 Pages
Unlock Document

ACTG 3110
Elizabeth Farrell

Chapter 8 Inventories and Cost of SalesItems and Costs Included in InventoryItems Included in InventoryAll goods for resale or use owned by the company on the balance sheet date should be included in inventory regardless of their locationGoods purchased and in transit should be included in the purchasers inventory provided ownership has passed to the purchaser Passage of title for goods in transit depends on the terms of the shipping contract In some cases title transfers to the buyer when the goods are passed to the carrier This is sometimes described as FOB free on board shipping point In other cases the seller has title until the carrier delivers the goods to the final customer This is sometimes described as FOB destinationGoods that are owned by a company but are out on consignment should be included in inventory Goods should be excluded from inventory if they are held for sale on commission or on consignment but owned by someone else or have been received from a supplier but rejected and are awaiting return to the supplier for creditRepurchase AgreementsSometimes suppliers enter into repurchase agreements to sell and buy back inventory items at prearranged prices if they are not resold by a certain date This provides the supplier the advantage of avoiding storage and finance expenses that would otherwise be incurred if the inventory was stored in houseThe buyer usually pays all or most of the retail value of the inventory covered in the repurchase agreement until the goods are reacquired by the seller again at a prearranged priceWhen a repurchase agreement exists the inventory must remain on the sellers books In effect repurchase agreements may be loans from customers rather than sales because the vendor has an obligation to pay back the customer if the goods are not resoldSpecial sale agreements exist in some industries including those selling items to retailers These agreements permit goods to be returned if not sold Revenue recognition rules suggest that these goods should be considered as sales only if
More Less

Related notes for ACTG 3110

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.