IAS 2 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Cost formulas: cost of issues and closing inventory: Weighted average cost
Trading company: cost of purchase of an imported lot, FIFO and weighted average cost
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 2 workpaper
- Level
- Foundation
- Estimated time
- ≈ 30 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Lumivia Distribution SAS (a fictitious entity) buys and resells L40 model LED lamps, all of the same nature and use. It imports its lamps from a foreign manufacturer and stores them in its Lyon warehouse before delivering them to DIY stores. You are preparing the financial statements for the year ended 31 December 20X1.
Assignment
Cost formulas and cost of sales workpaper.
Purpose of the workpaper
Determine the applicable cost formula (specific identification, FIFO or weighted average cost) and its consistency for inventories of a similar nature and use, calculate the cost of issues and of closing inventory, reconcile the cost of sales with the inventory movement and record the entries.
Questions of the file covered by this workpaper
- Calculate the cost of sales and closing inventories using FIFO and using the weighted average cost.
- Which cost formula do you apply and what do you answer the sales director?
- Reconcile the cost of sales from opening inventories, purchases and closing inventories.
- Record the cost of sales entry for 20X1.
Documents in the file
Open the documents to pick out the relevant information.