Page 16 - PowerPoint Presentation

INVENTORIES

Measurement

• Cost excludes:

• Trade and settlement discounts

• Rebates - unless genuinely refunding selling costs

• Abnormal wastage

• Storage costs - unless necessary for production

• Administrative overheads unrelated to bringing inventory into
condition and location for sale

• Selling costs

• Financing elements of transactions with deferred payment terms

• May use FIFO or Weighted Average costing methods

• Apply consistently to similar types of inventory

• In some circumstances, specific identification may be appropriate

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