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ABC Enterprise presents the following information relating to operations:

                            

Inventories – opening  

10 Units @ Rs. 100 per Unit

Purchases on July 12, 2016

05 Units @ Rs. 120 per Unit

Sales on July 15, 2016           

12 Units @ Rs. 150 per Unit

 

 

Required:

 

  1. What would be the cost of closing inventory as on July 16, 2016 to be reported in balance sheet by using following methods of inventory valuation?
    1. FIFO
    2. LIFO
  2. Which method of inventory valuation is NOT recommended by International Accounting Standards (IAS) for presenting the value of inventory in financial statements?
  3. Give valid arguments in favor of method NOT recommended by IAS for presenting the value of inventory in balance sheet

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Replies to This Discussion

fifo=300. lifo 360

i)
10 Units @ Rs. 100 per Unit
10*100=1000
Purchases on July 12, 2016
05 Units @ Rs. 120 per Unit
5*120=600 so
1000+600=1600 now
Sales on July 15, 2016
12 Units @ Rs. 150 per Unit
10*150=1500
2*150=300=1500+300=1800
now remening 3 purchase wale
3*120=360 closing stock
10 Units @ Rs. 100 per Unit
10*100=1000
Purchases on July 12, 2016
05 Units @ Rs. 120 per Unit
5*120=600 so
1000+600=1600 now
Sales on July 15, 2016
12 Units @ Rs. 150 per Unit
5*150=750
7*150=1050
so 750+1050=1800
now remening opening wale
3*100=300
closing stock
FIFO =360
Life =300
2)
lifo is NOT recommended by International Accounting Standards (IAS) for presenting the value of inventory in financial statements
3) we recommended FIFO method because the organization gaining maximum profitbilty by IAS for presenting the value of inventory in balance sheet

PlZ Muhammad zubair ya bata da lifo aur fifo ke value answer kya h

Dear Students Don’t wait for solution post your problems here and discuss ... after discussion a perfect solution will come in a result. So, Start it now, replies here give your comments according to your knowledge and understandings....

1... a . FIFO

opening stock 10*100 = 1000
add : purchases 5* 120 = 6000
less : sold out
10*100 = (1000
2 * 120 = ( 240)

closing stock 3* 120 = 360


b. LIFO

opening stock 10*100 = 1000
add : purchases 5* 120 = 6000
less : sold out
5**120 = ( 6000)
7 * 100 = ( 700)

closing stock 3* 100 = 300
2) lifo is NOT recommended by International Accounting Standards (IAS) for presenting the value of inventory in financial statements
3) FIFO should be recommended to get gaining maximum profitbilty by using IAS 2 through presenting the value of inventory in balance sheet

1...  a . FIFO 

opening stock   10*100  = 1000 
add : purchases  5* 120  = 6000
less : sold out 
                          10*100 =  (1000
                           2 * 120 =  ( 240)

closing stock      3* 120  =   360    


 b. LIFO 

opening stock   10*100  = 1000 
add : purchases  5* 120  = 6000
less : sold out 
                          5**120 = ( 6000)
                           7 * 100 =  ( 700)

closing stock      3* 100  =   300    


2) lifo is NOT recommended by International Accounting Standards (IAS) for presenting the value of inventory in financial statements
3) FIFO should be recommended to get gaining maximum profitbilty by using IAS 2 through presenting the value of inventory in balance sheet

Dear Students Don’t wait for solution post your problems here and discuss ... after discussion a perfect solution will come in a result. So, Start it now, replies here give your comments according to your knowledge and understandings....

Sir in 3rd question they asked "Give valid arguments in favor of
method NOT recommended by IAS for presenting the value of inventory in balance sheet."
means they r asking for arguments in favor of LIFO. am i right?

In FIFO

Date

Recipt

Issued

Balance

 Mm dd yyyy

 

 

10x100= 1000

July 12 2016

05x120=600

 

10x100=1000

05x120=600

July 15 2016

 

12x150=1800

0x100=0

03x120=360

July 16 2016

 

 

0x100=0

03x120=360

 

In LIFO

Date

Recipt

Issued

Balance

 Mm dd yyyy

 

 

10x100= 1000

July 12 2016

05x120=600

 

10x100=1000

05x120=600

July 15 2016

 

12x150=1800

03x100=300

0x120=0

July 16 2016

 

 

03x100=300

0x120=0

 

2: Ans

LIFO is NOT recommended by International Accounting Standards (IAS) for presenting the value of inventory in financial statements

3: Ans

According to IAS

“When inventories are sold, the carrying amount of those inventories shall be recognized as an expense in the period in which the related revenue is recognized.”

If LIFO evaluation method is used for inventory costing, the material purchased early could be bulk in stores for longer period of time. This can create a large gap in purchase n sale of that good

Due to this reason LIFO method is not suitable for inventory costing

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