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2025-04-04 22:00本頁(yè)面
【正文】 e ? NB Prudence concept Objectives of inventories valuation at full cost ? To determine profit ? For financial statements ? basis for ‘cost +’ pricing (sometimes) Cost: Comprises: ? All costs of purchase, ? costs of conversion ? and other costs incurred in bringing the inventories to their present location and condition. IAS 2 Cost of purchase ? the purchase price, ? import duties and other taxes ? transport, handling and other costs ? Less Trade discounts, rebates and other similar items SSAP 9 Cost Flow Models ? FIFO ? Weighted Average ? LIFO NB: LIFO is not acceptable under IAS 2 (revised 2023) or SSAP 9 Examples Widgets ? Jan 10 Bought 200 widgets 163。11 each ? Jan 25 Sold 270 widgets What is the Cost of Sales? Cost of conversion ? Direct labour. ? Direct expenses ? a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Example 1: Toy Manufacturer making Teddy Bears Cost of Finished Bear: ? Direct Materials (fluffy material, glass button eyes, stuffing etc etc) 163。4 per unit ? and a share of indirect costs: – Power: 163。8,000 ? per unit During the month, 1000 bears have been made. Therefore a reasonable share of production overheads would be: 8,000 = per unit. 1,000 Cost of Finished Bear: Direct Materials 163。4 per unit share of indirect costs: per unit Total per unit NB The estimates and judgements which have been used. Valuation of Partly Made Bear, at cost: ? A share of production overheads could be based on direct labour cost: – Cost of direct labour = 1000 bears at 163。8,000 in the month – Production overhead / cost of direct labour = ? Costs of partly made bear: Materials 163。 Actual at piece rate Overheads 2 x Direct labour cost Total Net Realisable Value: “The estimated selling price in the ordinary course of business less the estimated costs of pletion and the estimated costs necessary to make the sale.” IAS 2 NB ? Normally Cost NRV. Then inventories is valued at cost. Accruals (Realisation) and Prudence concepts ? Occasionally NRV Cost . Then inventories is valued at NRV Prudence concept Net Realisable Value: ? For a retailer or wholesaler or for the finished goods of a manufacturer, normally: Selling price less selling and distribution costs. Example – retailer Cost NRV Lower of Cost and NRV Line A 163。2,000 3,000 Line C 200 800 0 1,000 Irreparably damaged Line D 1500 750 Out of fashion Total 12,500 Net Realisable Value: For work in progress (or raw materials) of a manufacturer or of a service industry: ? Normal selling price ? less costs to pletion and selling and distribution costs in the normal course of business. Example 3 Valuation of Partly Made Bear: ? Costs so Far (See example 1): Materials 163。 Overheads 163。 ? Estimated Costs to Complete: Further Materials pl
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