Dertzmgertz
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Joined: 17 Nov 2010
Location: United States
Online Status: Offline
Posts: 3
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| Posted: 23 Feb 2011 at 10:44 | IP Logged
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Not necessarily. The problem might say that inventory was
acquired evenly throughout the year and sales were made
evenly throughout the year. In this situation, you would
use the weighted average for both Inventory and COGS.
I don't know if they would ask a question like this next
one, but it could be possible on a simulation.
They could give you beginning and ending inventory, COGS,
and tell you that inventory was acquired at cost and
purchases were made evenly throughout the year. In this
situation, you'd have to first find out what purchases
were by using BI + P - EI = COGS.
Then you would translate the BI @ the historical rate,
add the Purchases @ the weighted average and subtract EI
@ the current rate to get the correct COGS after remeasurement.
My point is, if you are told nothing at all about
inventory, use historical for inventory and COGS. But if
any extra information is given about how inventory or
purchases or sales were acquired or made, the rate might
not be historical.
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Topic: Remeasurment method-Inventory and COGS
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