Summary
Summary Inventories IAS 2
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A short summary of second-year level accounting for inventory. The focus is placed on costing.
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InventoryDefinition
1. Held for sale in the ordinary course of business OR (Merch)
2. In the process of production for sale OR (WIP)
3. In the form of materials or supplies to consumed in the production process or
in the rendering of services (Cons)
Systems to account for inventories
Perpetual: Provides up to date status of inventory levels
No. of items and cost of each cost of sale recorded in real time
Physical counts regularly done isolating shortages
NRV identified
Periodic: Inventory levels only known annually
Stock count done annually or other period increment
No losses as this is part of the closing value
Dr Sales Cr Returns
Determining Sales Price
SP = COS + GP
GP = COS x GP%
COS = SP x 100/100 + x
Average clause
Ins amt/Cost of Inv x Cost Destroyed
Raw Materials
The cost of goods purchased for use in manufacture and not yet introduced
into production at the reporting date
WIP
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