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    C7 Inventories (MT)

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    Cyril Grace Dedumo
    This document discusses inventories held by government entities. It defines inventories as assets held for sale, in production, or to be consumed. For governments, inventories include items held for sale, distribution, manufacturing, and consumption. Inventories are initially measured at cost and subsequently at the lower of cost or net realizable value for goods held for sale or the lower of cost or current replacement cost for goods held for distribution. Cost of inventories is calculated using specific identification or weighted average cost. The document also outlines the processes for receiving and issuing inventory in government entities.

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    C7 Inventories (MT)

    Uploaded by

    Cyril Grace Dedumo
    11 views2 pages
    This document discusses inventories held by government entities. It defines inventories as assets held for sale, in production, or to be consumed. For governments, inventories include items held for sale, distribution, manufacturing, and consumption. Inventories are initially measured at cost and subsequently at the lower of cost or net realizable value for goods held for sale or the lower of cost or current replacement cost for goods held for distribution. Cost of inventories is calculated using specific identification or weighted average cost. The document also outlines the processes for receiving and issuing inventory in government entities.

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    This document discusses inventories held by government entities. It defines inventories as assets held for sale, in production, or to be consumed. For governments, inventories include items held for sale, distribution, manufacturing, and consumption. Inventories are initially measured at cost and subsequently at the lower of cost or net realizable value for goods held for sale or the lower of cost or current replacement cost for goods held for distribution. Cost of inventories is calculated using specific identification or weighted average cost. The document also outlines the processes for receiving and issuing inventory in government entities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    11 views2 pages

    C7 Inventories (MT)

    Uploaded by

    Cyril Grace Dedumo
    This document discusses inventories held by government entities. It defines inventories as assets held for sale, in production, or to be consumed. For governments, inventories include items held for sale, distribution, manufacturing, and consumption. Inventories are initially measured at cost and subsequently at the lower of cost or net realizable value for goods held for sale or the lower of cost or current replacement cost for goods held for distribution. Cost of inventories is calculated using specific identification or weighted average cost. The document also outlines the processes for receiving and issuing inventory in government entities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    C7: Inventories (MT)

    Monday, February 6, 2023 7:39 PM

    Inventories are assets:


    a. Held for sale or distribution in the ordinary course of operations (finished goods)
    b. In the process of production for sale of distribution (WIP)
    c. In the form of material or supplies to be consumed in the production process or
    distributed in the rendering of services (raw material and supplies)
    Inventories in a GOVERNMENT ENTITY:
    a. Inventory held for sale
    b. Inventory held for distribution
    c. Inventory held for manufacturing
    d. Inventory held for consumption
    e. Semi-expandable property - consists of machinery, equipment, furniture and
    fixtures and similar items that are NOT capitalized as PPE because their costs are
    BELIR THE P15,000 capitalization threshold for PPE.

    Measurement - Initial measurement @ cost


    - Subsequent measurement @
    • Goods held for sale (LOWER OF COST AND NET REALIZABLE
    VALUE
    • Goods held for distribution (LOWER OF COST AND CURRENT
    REPLACEMENT COST
    - NRV: estimated selling price less estimated costs of completion and
    estimated selling/disposal costs
    - Current replacement cost: this is the cost that the entity would incur
    to acquire the asset on the reporting date.

    Cost formulas COGS and cost of inventories are calculated through:


    a. Specific identification - used by items that are not ordinarily
    interchangeable; segregated for specific projects
    - Cost of sales: actual costs of specific items sold
    - Ending inventory: actual costs of specific unsold items
    b. Weighted average cost - used for large numbers of items of
    inventory that are ordinarily interchangeable (perpetual
    inventory)
    - New weighted average unit cost is computed every after
    purchase
    - Cost of sales & ending inventory: average costs
    - Business = MOVING AVERAGE COST
    Government entities shall use the PERPETUAL INVENTORY SYSTEM
    Stock cards and stock ledgers are maintained
    FIFO is not used by government entities

    Government and NPO Accounting Page 1


    RECOGNITION OF EXPENSE:
    - Recognized as expense when:
    ○ Sold
    ○ Distributed
    ○ Exchanged
    ○ Consumed
    ○ Write-down of inventory to its NRV or current replacement
    cost
    GET BACK ON THE COMPUTATION AND THE JOURNALIZING

    Receipt and Receipt


    disposition of 1. Preparation of PURCHASE REQUEST
    inventories 2. PURCHASE ORDER: by the authorized official
    3. Property/ supply division signs the RECEIVED portion of the DR
    4. Property inspector: inspects the conformance of the delivered items
    with the stated PURCHASE ORDER
    5. STOCK CARD (SC)- recording of the supply by the property/supply
    division and accounting division
    6. BOOKS OF ACCOUNTS & SUPPLIES LEDGER CARD (SLC) - the
    accounting division records the items delivered which shows the
    quantities of all receipts and issuances of inventory and the available
    balance at any given point of time
    7. DISBURSEMENT VOUCHER - prepared by the property/supply
    division, with supporting documents given to the accounting division
    for processing of payment.
    Disposition
    8. REQUISITION AND ISSUE SLIP (RIS) - prepared by END USER to
    request for issuance of items available on stock. ->>> HEAD OF THE
    REQUESTING INDIVIDUAL shall approve of the RIS then forwarded
    to the property/supply division

    Government and NPO Accounting Page 2

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