Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this significant market event.
Instructions
Access the IFRS authoritative literature at the IASB website (eifrs.iasb.org/). When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.)
(a) Identify the authoritative literature addressing inventory pricing.
(b) List three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory?
(c) Define “net realizable value” as used in the phrase “lower-of-cost-or-net realizable value.”
(d) Explain when it is acceptable to state inventory above cost and which industries allow this practice.