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U.S. GAAP Codification of Accounting Standards |
| U.S. GAAP Codification | Accounting Standards, ASC |
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U.S. GAAP
Codification of Accounting Standards |
| U.S. GAAP Codification Updates |
| Principles of Accounting, Intermediate Accounting, Advanced Accounting |
| Accounting Terms |
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Codification Topic 330 Inventory Inventory Tangible personal property of the following: 1. held for sale --> merchandise, finished goods 2. in the course of production --> work in process 3. to be consumed in the production --> raw materials Initial measurement Inventories are measured at cost when first recognized Cost flow assumptions One of the following assumptions is made to determine the cost of inventory: 1. First-in First-out (FIFO): Items that came in first are sold first 2. Last-in First-out (LIFO): Items that came in last are sold first 3. Average method: Weighted average cost is applied as unit cost Retail inventory method is --> allowed in some situations Subsequent measurement If the market is lower than the cost --> inventory is measured at the market --> "Lower of Cost or Market" (LCM) Market 1. The market refers to current replacement cost 2. If net realizable value (NRV) is lower that current replacement cost --> NRV is the market 3. If current replacement cost is lower than (1) --> (1) is the market (1) net realizable value - normal profit margin Lower of Cost or Market (LCM) summary (a) current replacement cost (b) net realizable value (c) net realizable value - normal profit margin If (c) < (a) < (b) --> market = (a) If (c) < (b) < (a) --> market = (b) If (a) < (c) < (b) --> market = (c) |
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Codification Topic 330 Inventory |
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Subtopics of Codification Topic 330 330-10 Overall |
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Accounting Terms of Codification Topic 330-10 Direct effects of a change in accounting principle Inventory Market Net realizable value |
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