INVENTORIES COSTS You have been assigned a new graduate as part of your audit team and they have asked you a number of questions in relation to accounting for inventories at the Lake Clifton Ltd plant. Required Provide an answer and reasoning to the new graduates questions, as follows. 1. Should Lake Clifton Ltd include in its inventories normal brand‐name goods purchased from its suppliers but not yet received if the terms of purchase are FOB shipping point? 2. Should Lake Clifton Ltd include freight‐in expenditures as an inventories cost? 3. If Lake Clifton Ltd acquires its goods on terms 2/10 n/30, should the purchases be recorded gross or net? 4. What are products on consignment, and should they be included in the inventories balance in the statement of financial position? CASE STUDY