Gross Method-Purchase Discount Not Taken Are Included In Inventory

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Chapter 8-

Gross method- purchase discount not taken are included in inventory
Net method- purchase discounts not taken are considered interest expense
Periodic inv. System- adjust inv at the end of period
Perpetual inv. System- continuously record changes in inventory
Lifo- items sold that are acquired last
Fifo- items sold that are acquired first
Dvl- inv viewed as a quantity of value instead of phys quantity of goods. Comprising laters of dollar value from dif years
Difference between gross and net- GM views discounts not taken as part of inv method, and new considers discounts not taken as int expense
-inv does not include equipment
-perp- cost of purchases debited to inv
-peri- cost of purchases debited to purchase
-LIFO primary popularity because it is a deferral of income tax, tax savings
DVL- starts with ending inv measured in current prices and recreated lifo buyer for measuring costs
-compared to dollar value lifo, unit lifo is less commonly used
-IFRS – never adopted LIFO
-company cannot continue to use fifo for rax and lifo for fin, one for both

Chapter 9-
LCM- losses recognized when values declined
LCM- lack of consistency, and cannot be greaster than NRV, cannot be less than NRV – a norm profit margin
NRV- upper limit/ceiling, SP-cost of disposal=NRV
Floor- NRV less “normal” profit
Gross profit- estimates value of destroyed inv based on historical relationships, not necessary to know COGS
Mark up- added in arriving at ending inv retail, original cost add on
Mark down- deducted in arriving at ending inv retail, reduction in selling price
Net mark up and downs are included in the retail column to determine ending inv retail
Retail inv method- comp measures inv on its b/s by convert retail rpice to cost
Conventional relatil inv- avg, lower of cost or market
GPM and retail method- est. end inv, rely on relationship bet cost of sales and net sales
Gpm- historical gross profit data, retail uses current data to develop the relation of cost to net sales
1-gross profit = cost % cost %*net sales=COGS
LIFO there is no retail price and Index and DV always has ret.. price and index
-retrospective treatment of prior years’ fin. Statements is required when there is a change from LIFO to avg cost

Chapter 10-
Intangible assets- operational assets that generally rep various types of rights
Interest cost- both the total amount and the amount capitalized should be disclosed
Natural resources- wasting assets
Avg. acc. Expenditures- approx of avg outstanding debt if all contruction funds were borrowed
Amortization- the allocation of cost for for intangible assets
-inventory you buy, you can’t capitalize goodwill- purchase prices less fair value of net id assets –the excess of the FMV of a business over the FMV of all net id assets
-capitalized cost of equipment excludes: maintenance
-interest may be capitalized whether or not there is specific borring for
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