Inventories

You have been assigned to an agricultural client. You are not familiar with accounting for inventory in the agricultural industry. You need to do some research to familiarize yourself with the issues involved.

For each question, (1) provide the citation number (topic and subtopic) that addresses the question and (2) answer the question. Document this under the question, indenting your answer

(a) Identify the primary authoritative guidance for the accounting for inventories.

(b) Define the meaning of cost as it applies to the initial measurement of inventory.

(c) Indicate the circumstances when it is appropriate to initially measure agricultural inventory at fair value.

(d) What is a major objective of accounting for inventory?

(e) Are abnormal freight charges included in the cost of inventory?