Professional Documents
Culture Documents
Accounting Issues
Lower of Cost or NRV
Quantity
1. Maintain perpetual inventory
record
2. Conduct inventory count
a. Final FY end count
b. Perpetual/Cyclical Inventory
Count
Cost Price
1. Trading Co Purchase Cost
a. Include directly attributable cost
to bring the asset to its present
location & condition
b. Depends on FIFO, WACC, LIFO
2. Manufacturing Co
a. Product Cost = DM + DL + MOH
b. Predetermined Overhead Rate,
ABC, Standard Cost
iii.
Goods to be delivered out and received should be placed at its designated areas.
iv.
Take note of last GDN # and GRN # for cut off procedures
(E.g last GDN #1000 so for GDN #1001: included in the count; GRN #900 so for GRN
#901: excluded in count because its for next year purchases and inventory)
v.
vi.
vii.
accounting policy
Direct labour inspect timesheets/records & payroll record for direct
iv.
labour rate
Manufacturing Overhead Review the basis of cost allocation,
apportionment and absorption/application to products. Ensure that
price is available
Consider the characteristics of products and assess the risk of
v.
vi.
impairment loss e.g falling demand (ask to see their order book)
Review inventory ageing report
Perform analytical procedures - compare inventory turnover ratio (if the
trend is consistent, client may be right)