Inventory And Fixed Assets

Running Head: Fixed Assets and stocktaking Concepts Fixed Assets and muniment Concepts Yvonne Rodriguez University of Phoenix ACC541 – Week 2 November 9, 2009 Fixed Assets and Inventory Concepts some additional key accounting information is required in order to complete the analysis for the organization’s arrive papers included in the audit. This paper will slake the purpose and requirements pertaining to the following accounting practices often used in your industry: adjusting lower personify of market account on valuation, capitalizing intimacy on building device, recording gain or loss on asset disposal, and adjusting goodwill for impairment. Adjusting lower cost of market muniment on valuation At acquisition, inventories are enter at cost, which follows the GAAP historical cost principle. However, if inventory declines in esteem below its original cost, a fellowship should spare down the inventory to market and report t his as a loss. Market value is relevant to inventory, unlike the other(a) asset accounts such(prenominal) as property, plant, and equipment, since it is available for sale and non held for business use. Inventory value is directly tied to revenue.

The archetype of adjusting to lower of cost or market allows the proper co-ordinated of cost and revenue and is a buttoned-down approach to inventory valuation. The decline in value could subject from damaged goods, footing change or obsolescence. This provides a unimaginative means of standard utility and thereby determining the summation of the loss to be recognized and accounted for in the current menstruation (Kieso, etal, 2007, pp. 422-428). Capitalizing interest on buildi! ng construction When a attach to is acquiring a fixed asset by construction internally, the asset’s cost is GAAP requires companies to capitalize interest charges during construction to fall out with the historical cost surmisal of acquiring an asset includes the costs necessarily incurred to bring it to...If you compulsion to get a right essay, order it on our website: OrderEssay.net

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