Accounting Financial Analysis Report Inventories

Question: Write theAccounting Financial Analysis Report forInventories. Answer: Introduction 1.IAS 2 Inventories comprises the condition on how to interpretate for the kinds of inventory.The motive of IAS 2 is to recommend the accounting conduct for inventories. It provide guiadance to determine the charge of inventorie and then recognise an expense which includes write down to the net realisable value. It also gives a guaidance on the formulas of cost. Inventories are actually goods which include assests held for sale in normal operations of commerce and also includes materials and supplies that are wholly expended in manufacture. Accounting standard 2 does not include work in progress, financial instruments, and biological assets which is related to agriculture The important principle is the value the stock at lower of cost and NRV. In inventories the cost should include all the costs of purchase which includes duties, costs of change, with other costs which includes the inventory to carry in to the present location. NRV is actually the projected selling price in normal co urse of business minus the estimated costs or other costs that will lead to complete of sale. Some write down of NRV should be classified as an expense in the period in which the write down happens. IAS 2 allows an entity to disclose operating costsrecognised during the periodby nature of the cost and the quantity of net change in inventories for the period. The reason aimed at using lesser of cost an net realisable value is that the stock should portray correct values and should not be overrated or underrated. If by any case the NRV is less than the cost of producing, then the NRV should be the inventory quantity. The financial statements should show correct figures. The amount of write down of inventory as a result of application of the lower net realisable policy is $ 1.8 million in 2014 and $1.4 million in 2013 (Theresa, 2013). The likely causes of write down of inventory are: A write down in inventory is recorded by reducing the amount recorded as inventory. We can say that the inventory account is reduced by a credit. Inventory is written down if the goods or the pstock is lost or is stolen and in cases where the value has been weakened. If an individual is not aware of the inventory issue or problem then he should charge the entire sum as expense at instance. Write down over the forthcoming periods should not be spread as there is no benefit in this case. The future probability of inventorie is uncertain and it is due to many reasons such as demand of sales, levels of inventory, cost of production and quality of the product. Each balance sheet it is necessary to revalue and to see whether the amount is reflected properly according to the accounting standard. Inventory calculation also integrates a write-down to reflect future losses on the of obsolete produce. The Company also makes provision for the approximation lessening that has occurred amongst phy sical inventory count as a proportion of sales (Wiecek, 2013). Vendor settlement accrual is a system the company archives to cover any disagreements that arises between corporation and its vendors. References Theresa, H. (2013) The Effects of Adopting IFRS: The Canadian Experience. Retrieved 02 December 2016fromhttps://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1016context=bus_admin_dis Wiecek, I. (2013) Guide to International Financial Reporting Standards in Canada: The Canadian Experience.Retrieved02December2016from file:///C:/Users/com/Downloads/Guide%20to%20International%20Financial%20Reporting%20Standards%20in%20Canada%20IAS%2016%20Property%20Plant%20and%20Equipment.pdf