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- This topic has 3 replies, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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- October 19, 2023 at 10:53 am #693674
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 ?
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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 #693713Any method that approximates cost.
This is more of an FA question.
October 20, 2023 at 8:16 am #693720but 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 #693764FIFO v AVCO is accounting policy – so should be consistent
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