Inventory Basics(재고자산 인식과 결정)

Detemining Inventory Items

 Merchandise inventory includes all goods that a company owns and holds for sale. This rule holds regardless of where the goods are located when inventory is counted. Certain inventory items in cluding goods in transit, goods on consignment and goods that are damaged or obsolete require special attention.

 Goods in Transit Does a purchaser's inventory include goods in transit from a supplier? If the purchaser is responsible for paying freight, ownership passes when goods are loaded on the transport vehicle. If the seller is responsible for paying freight, ownership passes when goods arrive at their destination.

 Goods on Consignment A consignee sells goods for the owner. The consignor continues to own the consigned goods and reports them in its inventory.

 Goods damaged or obsolete Damaged and obsolete(and deteriorated) goods are not counted ininventory if  they cannot be sold. If these goods can be sold at a reduced price, they are included in inventory at a conservative estimate of their net realizable value. net realizable value is sales price minus the cost of makin gthe sale. The period when damage or obsolescence(or deterioration) occurs is the period when the loss in value is reported.

 

Determining Inventory Costs

 Merchandise in ventory includes costs of expenditures necessary to bring an item to a salable condition and location. This means that the cost of an inventory item includes its invoice cost minus any discount, and plus any added or incidental costs necessary to put it in a place and condition for sale. Added or incidental costs can include import duties, freight, storage, insurance, and costs incurred in an aging process(aging wine or cheese)

 The matching princple states the inventory costs should be recorded against revenue in the period when inventory is sold. However, some companyes use the materiality principle(cost-to-benefit constraint) to avoid assigning incidental costs of acquiring merchandise to inventory. These companies argue either that incidental costs are immaterial or that the effort in assigning these costs to inventory outweighs the benefit.