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inventory valuation methods IAS 2( cost, fifo , lifo )

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › inventory valuation methods IAS 2( cost, fifo , lifo )

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by Stephen Widberg.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 19, 2023 at 10:53 am #693674
    abdullah
    Participant
    • Topics: 35
    • Replies: 29
    • ☆☆

    For a general trading company (which buys and sells goods ), like using a (computer ,phones and electronic) shop as an example

    it has many types of items like fridges , washing machines, computers, laptops , ipads , microwave,(now these can be unique items each , as well as multiple pieces of the exact same model )

    so what are the types of inventory valuation allowed ?

    like if were to buy 10 models of iphone 15 256 gb of the exact same type (just the color is different ),for the same price , and the later on , during the year the prices fell , and we bought another 12 pieces for cheaper prices (so now what method of costing we can use during the sale ) ,

    if during the end of the year if we were to sell an iphone , what should be the cost attributed to it ?

    we have an option to use the exact cost we bought it for ? or fifo or weighted average ? right ? and we have made the decision to use FIFO .
    ———————————————————————————–

    Now if were to buy iphone 15 pro max 256 gb , can we record this using the weighted average method ? will IAS 2 ALLOW THIS ? , it mentions about choosing measuring items using the same method for similar economic characteristics , what does this mean ?

    ——————————————————–

    If we were to buy 10 exact fridges from the same year and model , and then buy another 20 fridges during the year of the same year and model with cheaper prices ,
    so when we were to make a sale during the end of the year , can we use the exact COST method for the purpose of costing ?

    ———————————————————-

    are the above allowed under ias 2 ? can we use different methods of costing for the iphone 15 , iphone 15 pro max , and the fridge ?

    October 20, 2023 at 7:26 am #693713
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3397
    • ☆☆☆☆☆

    Any method that approximates cost.

    This is more of an FA question.

    October 20, 2023 at 8:16 am #693720
    abdullah
    Participant
    • Topics: 35
    • Replies: 29
    • ☆☆

    but my question is not about which method to use,

    I am asking about if ias 2 allows this:

    can we as a company , measure

    all iPhone 15 256 gb in our stock at fifo ?

    all iPhone 15 pro max 256 gb in our stock at weighted average ?

    all iPhone 15 pro max 500 gb in out stock at fifo ?

    is the above allowed ??
    ——————————————-

    I DO KNOW , that if were to measure all iPhone 15 256 gb at fifo , then we should stick with this method and be consistent with , we should NOT measure some iPhone 15 256 gb at exact cost , or fifo , or avco.

    BUT IAS 2 talks about being consistent with the method of valuation with things of similar nature and economic charasterics , what does it mean briefly ? or just clarify by iPhones example above.

    October 21, 2023 at 7:08 am #693764
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3397
    • ☆☆☆☆☆

    FIFO v AVCO is accounting policy – so should be consistent

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘inventory valuation methods IAS 2( cost, fifo , lifo )’ is closed to new replies.

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