【文章內(nèi)容簡介】 ghted average for the entire period. 932 Average Cost Method 200 units @ $10 per unit 300 units @ $12 per unit 500 units @ $11 per unit 100 units @ $13 per unit 1,100 units Jan. 1 Mar. 23 July 15 Nov. 6 = $ 2,000 = 3,600 = 5,500 = 1,300 $12,400 $12,400 ? 1,100 units = $ per unit (rounded) Cost of goods sold = $ ? 700 = $7,890 Ending inventory = $ ? 400 = $4,510 933 FirstIn, FirstOut (FIFO) Method ? FIFO assigns historical unit cost to cost of goods sold in the order the costs are incurred. ? Provides a close match between physical product flow and product cost flow. ? Results in the same inventory valuation and cost of goods sold regardless of whether perpetual or periodic inventory is used. 934 FIFO Method 200 units @ $10 per unit 300 units @ $12 per unit 500 units @ $11 per unit 100 units @ $13 per unit Jan. 1 Mar. 23 July 15 Nov. 6 Total cost of goods sold $7,800 Sold 200 = $2,000 Sold 300 = 3,600 Sold 200 = 2,200 935 FIFO Method 300 units @ $11 per unit 100 units @ $13 per unit Mar. 23 Nov. 6 = $3,300 = 1,300 Ending inventory $4,600 936 LastIn, FirstOut (LIFO) Method ? LIFO assigns the most recent historical costs to cost of goods sold and the oldest costs to inventory. ? Is used primarily to minimize taxable ine. ? Results in differences between cost of goods sold and inventory for perpetual versus periodic methods. 937 LIFO Method 200 units @ $10 per unit 300 units @ $12 per unit 500 units @ $11 per unit 100 units @ $13 per unit Jan. 1 Mar. 23 July 15 Nov. 6 Total cost of goods sold $8,000 Sold 100 = $1,300 Sold 500 = $5,500Sold 100 = $1,200 938 LIFO Method = $2,000 = 2,400 Ending Inventory $4,400 200 units @ $10 per unit 200 units @ $12 per unit Jan. 1 Mar. 23 939 940 (continues) (continued) 941 942 LIFO Layers The following data are for Ryanes Company for the first three years of its existence: 943 LIFO Layers ? Each year in which the number of units purchased exceeds the number of units sold, a new LIFO layer is created in ending inventory. ? Many panies that use LIFO report the amount of their LIFO reserve, either as a parenthetical note in the balance or the notes to the financial statements. 944 Calculating FIFO Cost of Goods for Ryanes for 2020 The FIFO calculation can be done as follows: 945 LIFO Liquidation Ryanes Company’s purchases and sales for 2020 are as follows: Purchases 60 units @ $20 Sales 150 units @ $25 Because the number of units purchased does not exceed the number sold, no new LIFO layer is added in 2020. (continues) 946 LIFO Liquidation LIFO liquidation causes old LIFO layer costs to flow through cost of goods sold, sometimes with bizarre results. 947 (continues) 948 (concluded) 949 Ine Tax Effects If a pany has large inventory levels, is experiencing significant inventory cost increases, and does not anticipate reducing inventory levels in the future, LIFO gives substantial cash flow benefits in terms of tax deferrals. 950 Bookkeeping Costs ? The bookkeeping associated with LIFO is a bit more plicated than with FIFO or average costs. ? In dollars and cents, a LIFO system costs more to operate. ? Until information technology is improved, small businesses will continue to lean toward not using LIFO. 951 Impact on Financial Statements While LIFO gives tax benefits, it also gives reduced reported ine and reduced reported inventory. 952 International Accounting and Inventory Valuation ? In 1992, the IASB decided to officially endorse FIFO and average cost, to kill the base stock method, and to let LIFO live on as a secondclass “allowed alternative treatment.” ? In 2020, the IASB adopted a revised version of IAS 2 and did away with LIFO. 953 Inventory Accounting Change If a pany changes its method of valuing inventory, the change is accounted for as a change in accounti