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Inventory

FAR Chapter 12 · Area II · Blueprint II.C

Inventory is often the largest current asset, and every dollar left in ending inventory is a dollar kept out of cost of goods sold. The Blueprint asks you to calculate the carrying amount of inventory under the different costing methods, to measure impairment under both the lower of cost and net realizable value and the lower of cost or market, and to prepare rollforwards and reconciliations. Expect calculations in both MCQs and simulations.

In this chapter

1. What goes into inventory cost, and whose inventory it is
2. Periodic and perpetual systems, and the rollforward
3. Cost flow methods
4. Comparing FIFO and LIFO
5. Lower of cost and net realizable value
6. Lower of cost or market
7. Estimating and reconciling inventory
8. Dollar-value LIFO and firm purchase commitments

This chapter has 8 lessons, 52 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Costing methods
• lower of cost and net realizable value
• lower of cost or market
• rollforwards and reconciliations

Chapter 11: Trade receivables · Chapter 13: Property, plant and equipment