西方财务会计 原版课件(3).ppt

,CHAPTER9,INVENTORIES:ADDITIONALVALUATIONISSUES,IntermediateAccounting13thEditionKieso,Weygandt,andWarfield,Describeandapplythelower-of-cost-or-marketrule.Explainwhencompaniesvalueinventoriesatnetrealizablevalue.Explainwhencompaniesusetherelativesalesvaluemethodtovalueinventories.Discussaccountingissuesrelatedtopurchasecommitments.Determineendinginventorybyapplyingthegrossprofitmethod.Determineendinginventorybyapplyingtheretailinventorymethod.Explainhowtoreportandanalyzeinventory.,LearningObjectives,NetrealizablevalueRelativesalesvaluePurchasecommitments,Lower-of-Cost-or-Market,ValuationBases,GrossProfitMethod,RetailInventoryMethod,PresentationandAnalysis,CeilingandfloorHowLCMworksApplicationofLCM“Market”Evaluationofrule,GrossprofitpercentageEvaluationofmethod,ConceptsConventionalmethodSpecialitemsEvaluationofmethod,PresentationAnalysis,Inventories:AdditionalValuationIssues,Market=ReplacementCostLowerofCostorReplacementCostLossshouldberecordedwhenlossoccurs,notintheperiodofsale.,Acompanyabandonsthehistoricalcostprinciplewhenthefutureutility(revenue-producingability)oftheassetdropsbelowitsoriginalcost.,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,LCM,DeclineintheRCusually=declineinsellingprice.RCallowsaconsistentrateofgrossprofit.IfreductioninRCfailstoindicatereductioninutility,thentwoadditionalvaluationlimitationsareused:Ceiling-netrealizablevalueandFloor-netrealizablevaluelessanormalprofitmargin.,WhyuseReplacementCost(RC)forMarket?,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,CeilingandFloor,Not,Illustration9-3,Ceilingpreventsoverstatementofthevalueofobsolete,damaged,orshopworninventories.Floordetersunderstatementofinventoryandoverstatementofthelossinthecurrentperiod.,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,RationaleforLimitations,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,HowLCMWorks(IndividualItems),Illustration9-5,Solutiononnotespage,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,MethodsofApplyingLCM,Illustration9-6,Solutiononnotespage,LO1Describeandapplythelower-of-cost-or-marketrule.,Lower-of-Cost-or-Market,RecordingLCM(datafromIllus.9-5and9-6),Endinginventory(cost)$415,000Endinginventory(LCM)350,000AdjustmenttoLCM$65,000,Allowanceoninventory65,000,Lossoninventory65,000,Inventory65,000,Costofgoodssold65,000,AllowanceMethod,DirectMethod,LO1Describeandapplythelower-of-cost-or-marketrule.,Lower-of-Cost-or-Market,BalanceSheetPresentation,LO1Describeandapplythelower-of-cost-or-marketrule.,Lower-of-Cost-or-Market,IncomeStatementPresentation,P9-1:KCCompanymanufacturesdesks.Thecompanyattemptstoobtaina20%grossmarginonsellingprice.AtDecember31,2010,thefollowingfinisheddesksappearinthecompanysinventory.,Instructions:AtwhatamountshouldthedesksappearinthecompanysDecember31,2010,inventory,assumingthatthecompanyhasadoptedalower-of-FIFO-cost-or-marketapproachforvaluationofinventoriesonanindividual-itembasis?,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,Not,Not,Not,Not,Expenserecordedwhenlossinutilityoccurs.Profitonsalerecognizedatthepointofsale.Inventoryvaluedatcostinoneyearandatmarketinthenextyear.Netincomeinyearoflossislower.Netincomeinsubsequentperiodmaybehigherthannormalifexpectedreductionsinsalespricedonotmaterialize.LCMusesa“normalprofit”indetermininginventoryvalues,whichisasubjectivemeasure.,SomeDeficiencies:,Lower-of-Cost-or-Market,LO1Describeandapplythelower-of-cost-or-marketrule.,EvaluationofLCMRule,acontrolledmarketwithaquotedpriceapplicabletoallquantities,andnosignificantcostsofdisposal(raremetalsandagriculturalproducts)or(3)toodifficulttoobtaincostfigures(meatpacking),PermittedbyGAAPunderthefollowingconditions:,ValuationBases,LO2Explainwhencompaniesvalueinventoriesatnetrealizablevalue.,NetRealizableValue,Usedwhenbuyingvaryingunitsinasinglelump-sumpurchase.,ValuationBases,LO3Explainwhencompaniesusetherelativesalesvaluemethodtovalueinventories.,RelativeSalesValue,E9-7:LarsenRealtyCorporationpurchasedatractofunimprovedlandfor$55,000.Thislandwasimprovedandsubdividedintobuildinglotsatanadditionalcostof$30,000.Thesebuildinglotswereallofthesamesizebutowingtodifferencesinlocationwereofferedforsaleatdifferentpricesasfollows.Operatingexpensesallocatedtothisprojecttotal$18,200.,Instructions:Calculatethenetincomerealizedonthisoperationtodate.,ValuationBases,LO3Explainwhencompaniesusetherelativesalesvaluemethodtovalueinventories.,E9-7(RelativeSalesValueMethod-Solution),x,=,x,=,=,x,Generallysellerretainstitletothemerchandise.Buyerrecognizesnoassetorliability.Ifmaterial,thebuyershoulddisclosecontractdetailsinfootnote.Ifthecontractpriceisgreaterthanthemarketprice,andthebuyerexpectsthatlosseswilloccurwhenthepurchaseiseffected,thebuyershouldrecognizelossesintheperiodduringwhichsuchdeclinesinmarketpricestakeplace.,ValuationBases,LO4Discussaccountingissuesrelatedtopurchasecommitments.,PurchaseCommitments,ValuationBases,LO4Discussaccountingissuesrelatedtopurchasecommitments.,Illustration:St.RegisPaperCo.signedtimber-cuttingcontractstobeexecutedin2012atapriceof$10,000,000.AssumefurtherthatthemarketpriceofthetimbercuttingrightsonDecember31,2011,droppedto$7,000,000.St.RegiswouldmakethefollowingentryonDecember31,2011.,UnrealizedHoldingGainorLossIncome3,000,000EstimatedLiabilityonPurchaseCommitments3,000,000,ValuationBases,LO4Discussaccountingissuesrelatedtopurchasecommitments.,Illustration:WhenSt.Regiscutsthetimberatacostof$10million,itwouldmakethefollowingentry.,Purchases(Inventory)7,000,000EstimatedLiability3,000,000Cash10,000,000,IfCongresspermittedSt.Registoreduceitscontractpriceandthereforeitscommitmentby$1,000,000.,EstimatedLiability1,000,000UnrealizedHoldingGainorLossIncome1,000,000,ReliesonThreeAssumptions:,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,SubstituteMeasuretoApproximateInventory,Beginninginventorypluspurchasesequaltotalgoodstobeaccountedfor.Goodsnotsoldmustbeonhand.(3)Thesales,reducedtocost,deductedfromthesumoftheopeninginventorypluspurchases,equalendinginventory.,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,Illustration:CetusCorp.hasabeginninginventoryof$60,000andpurchasesof$200,000,bothatcost.Salesatsellingpriceamountto$280,000.Thegrossprofitonsellingpriceis30percent.Cetusappliesthegrossmarginmethodasfollows.,Illustration9-13,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,ComputationofGrossProfitPercentage,Illustration9-16,E9-12:AstaireCompanyusesthegrossprofitmethodtoestimateinventoryformonthlyreportingpurposes.PresentedbelowisinformationforthemonthofMay.,Instructions:(a)ComputetheestimatedinventoryatMay31,assumingthatthegrossprofitis25%ofsales.(b)ComputetheestimatedinventoryatMay31,assumingthatthegrossprofitis25%ofcost.,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,E9-12(Solution):,(a)Computetheestimatedinventoryassuminggrossprofitis25%ofsales.,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,(b)Computetheestimatedinventoryassuminggrossprofitis25%ofcost.,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,25%100%+25%,=20%ofsales,E9-12(Solution):,Disadvantages:,GrossProfitMethod,LO5Determineendinginventorybyapplyingthegrossprofitmethod.,Evaluation:,Providesanestimateofendinginventory.Usespastpercentagesincalculation.Ablanketgrossprofitratemaynotberepresentative.Onlyacceptableforinterim(generallyquarterly)reportingpurposes.,RetailInventoryMethod,LO6Determineendinginventorybyapplyingtheretailinventorymethod.,Amethodusedbyretailers,tovalueinventorywithoutaphysicalcount,byconvertingretailpricestocost.,thetotalcostandretailvalueofgoodspurchased,thetotalcostandretailvalueofthegoodsavailableforsale,andthesalesfortheperiod.,Requiresretailerstokeep:,P9-8:FuqueInc.usestheretailinventorymethodtoestimateendinginventoryforitsmonthlyfinancialstatements.ThefollowingdatapertaintoasingledepartmentforthemonthofOctober2011.,RetailInventoryMethod,Instructions:Prepareaschedulecomputingestimateretailinventoryusingthefollowingmethods:(1)Cost(2)LCM(3)LIFO(appendix),LO6Determineendinginventorybyapplyingtheretailinventorymethod.,RetailInventory-CostMethod,LO6Determineendinginventorybyapplyingtheretailinventorymethod.,=,/,RetailInventory-LCMMethod,LO6Determineendinginventorybyapplyingtheretailinventorymethod.,=,/,RetailInventory-LIFOMethod,LO8DetermineendinginventorybyapplyingtheLIFOretailinventorymethods.,=,/,=,/,Appendix9A,SpecialItems,RetailInventoryMethod,LO6Determineendinginventorybyapplyingtheretailinventorymethod.,FreightcostsPurchasereturnsPurchasediscountsandallowancesTransfers-inNormalspoilageAbnormalshortagesEmployeediscounts,Widelyusedforthefollowingreasons:,Evaluation:,topermitthecomputationofnetincomewithoutaphysicalcountofinventory,asacontrolmeasureindetermininginventoryshortages,inregulatingquantitiesofmerchandiseonhand,andforinsuranceinformation.,RetailInventoryMethod,LO6Determineendinginventorybyapplyingtheretailinventorymethod.,Somecompaniesrefinetheretailmethodbycomputinginventoryseparatelybydepartmentsorclassofmerchandisewithsimilargrossprofits.,Accountingstandardsrequiredisclosureof:,PresentationandAnalysis,LO7Explainhowtoreportandanalyzeinventory.,Presentation:,compositionoftheinventory,financingarrangements,andcostingmethodsemployed.,Commonratiosusedinthemanagementandevaluationofinventorylevelsareinventoryturnoverandaveragedaystoselltheinventory.,Analysis:,Measuresthenumberoftimesonaverageacompanysellstheinventoryduringtheperiod.,PresentationandAnalysis,LO7Explainhowtoreportandanalyzeinventory.,InventoryTurnoverRatio,Illustration9-26,Measurerepresentstheaveragenumberofdayssalesforwhichacompanyhasinventoryonhand.,PresentationandAnalysis,LO7Explainhowtoreportandanalyzeinventory.,AverageDaystoSellInventory,365days/7.5times=every48.7days,AverageDaystoSell,Illustration9-26,U.S.GAAPpermitstheuseofLIFOforinventoryvaluation.iGAAPprohibitsitsuse.Inthelower-of-cost-or-markettestforinventoryvaluation,iGAAPdefinesmarketasnetrealizablevalue.U.S.GAAPdefinesmarketasreplacementcostsubjecttotheconstraints.InU.S.GAAP,inventorywrittendownunderthelower-of-cost-or-marketvaluationmaynotbewrittenbackuptoitsoriginalcostinasubsequentperiod.UnderiGAAP,thewrite-downmaybereversedinasubsequentperiod.,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,PrimaryreasontouseLIFOTaxadvantages.Resultsinabettermatchingofcostsandrevenues.TheuseofLIFOretailismadeundertwoassumptions:stablepricesandfluctuatingprices.,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,StablePricesLIFORetailMethod,AmajorassumptionoftheLIFOretailmethodisthatthemarkupsandmarkdownsapplyonlytothegoodspurchasedduringthecurrentperiodandnottothebeginninginventory.Beginninginventoryisexcludedfromthecost-to-retailpercentage.,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,ILLUSTRATION9A-1LIFORetailMethodStablePrices,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,ILLUSTRATION9A-2EndingInventoryatLIFOCost,2010StablePrices,Inventoryiscomposedoftwolayers.,Solutiononnotespage,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,ILLUSTRATION9A-3EndingInventoryatLIFOCost,2011StablePrices,Assumethattheendinginventoryfor2011atretailis$50,000.Noticethatthe2010layerisreducedfrom$11,000to$5,000.,Solutiononnotespage,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,FluctuatingPricesDollar-ValueLIFORetail,Ifthepriceleveldoeschange,thecompanymusteliminatethepricechangesoastomeasuretherealincreaseininventory,notthedollarincrease.,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,Illustration:Assumethatthebeginninginventoryhadaretailmarketvalueof$10,000andtheendinginventoryhadaretailmarketvalueof$15,000.Assumefurtherthatthepricelevelhasrisenfrom100to125.Itisinappropriatetosuggestthatarealincreaseininventoryof$5,000hasoccurred.Instead,thecompanymustdeflatetheendinginventoryatretail.,Illustration9A-4,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,Illustration:Assumethatthecurrent2010priceindexis112(prioryear100)andthattheinventory($56,000)hasremainedunchanged.,Illustration9A-5,Dollar-ValueLIFORetailMethodFluctuatingPrices,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,Illustration:Fromthisinformation,wecomputetheinventoryamountatcost:,Illustration9A-6,Hernandezmustrestatelayersofaparticularyeartothepricesineffectintheyearwhenthelayerwasadded.,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,Illustration9A-7,ComparisonofEffectofPriceAssumptions,LO8DetermineendinginventorybyapplyingtheLIFOretailmethods.,Illustration:Usingthedatafromthepreviousexample,assumethattheretailvalueofthe2011endinginventoryatcurrentpricesis$64,800,the2011priceindexis120percentofbase-year,andthecost-to-retailpercentageis75percent.ComputetheendinginventoryatLIFOcost.,Illustration9A-8,SubsequentAdjustmentsunderDollar