inventory

Hi

We’ve already been through this! A motor is a motor is a motor! If it’s a motor, it’s valued as a motor, the same way as the other motors are valued.

So, if it’s identical to other inventory, then it’s valued identically to the other inventory.

Imagine this. One of the motors has been set aside as a spare part for maintenance purposes. You have two others in inventory held for sale.

What happens when I walk into your premises and say that I want three motors? Are you going to turn to me and say “You can’t have three, you can only have two” But I can see three, just behind the counter. You’re about to create a very unhappy customer! Of course you’ll sell three to me and immediately order replacements from your supplier

Yes, but what happens if your customer has two faulty routers on the same day? You’re in trouble! So make sure that you have in inventory sufficient routers to cater for just such an emergency.

This is all in F2 under the heading Inventory Control and the Economic Order Quantity. Unless you can operate a super-efficient just-in-time inventory ordering system, you’re going to have to hold some inventory and, to continue the previous posts, if it’s a motor, it’s a motor

If it’s broken, then the value of the returned dvd player can only be the cost value of the re-usable parts

Does that do it for you?

No, that doesn’t do it for me! It’s not just the name that needs to be different. The aggregate cost of all components will be lower (probably substantially lower) than the value attributable to a part used machine

“one as equipment and other as spare part.” is not enough!

No! One is in a salable condition and should be valued at cost

The other (the one that has been returned because “However it got broke i contacted the supplier and he had to repalce the item. Was wandering so the other one was as a spare part.”) should be valued (as I have already indicated above!) as the aggregate of the cost price of the individual component re-usable parts

“So how should they value both with one weighted average ?” – they are no longer the same product. One is available for sale. The other is an incomplete collection of spare parts that happen to be included within one unit and is not available for sale. It can only be cannibalised to provide parts necessary to repair other dvd machines

“Ok good . so same goods can be valued differently if they have different use for that particular company. That answer my question.”

NOOOOO!

In the last paragraph of my previous post I point out that THEY ARE NO LONGER THE SAME PRODUCT

If they are (and in the scenario that you have set up, they are not), then you would value them at the same amount. The purpose to which the company intends to put these products is irrelevant. One to be used for sale and the other possibly to be used for cannibalisation? It doesn’t matter! If they are identical, then the value must be the same

If there is a third item that has already been part used as spares, then that third product is NOT IDENTICAL because it’s no longer in a condition to be sold. It’s no longer the same product. And this third item will be valued at the aggregate of the reusable separate parts still within the shell of the product

But you are incorrect to say “”Ok good . so same goods can be valued differently if they have different use for that particular company. “