CHAPTER 8
Valuation of Inventories: A Cost-Basis Approach
ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)
Topics | Questions | Brief Exercises | Exercises | Problems | Concepts for Analysis | |
| 1. | Inventory accounts; determining quantities, costs, and items to be included in inventory; the inventory equation; balance sheet disclosure. | 1, 2, 3, 4, 5, 6, 8, 9 | 1, 3 | 1, 2, 3, 4, 5, 6 | 1, 2, 3 | 1, 2, 3, 5, 11 |
| 2. | Perpetual vs. periodic. | | 2 | 9, 13, 14, 17, 20 | 4, 5, 6 | |
| 3. | Recording of discounts. | 10, 11 | | 7, 8 | 3 | 4 |
| 4. | Inventory errors. | 7 | 4 | 2, 3, 4, 5, 10, 11, 12 | 2 | |
| 5. | Flow assumptions. | 12, 13, 16, 18, 20 | 5, 6, 7 | 9, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 | 1, 4, 5, 6, 7 | 5, 6, 7, 8 |
| 6. | Inventory accounting changes. | | | 18 | 7 | 6, 7, 10 |
| 7. | Dollar-value LIFO methods. | 14, 15, 17, 18, 19 | 8, 9 | 22, 23, 24, 25, 26 | 1, 8, 9, 10, 11 | 8, 9 |
ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE)
Learning Objectives | Brief Exercises | Exercises | Problems |
| 1. Identify major classifications of inventory. | 1 | | |
| 2. Distinguish between perpetual and periodic inventory systems. | 2 | 4, 9, 13, 17, 20 | 4, 5, 6 |
| 3. Identify the effects of inventory errors on the financial statements. | 4 | 5, 10, 11, 12 | |
| 4. Understand the items to include as inventory cost. | 3 | 1, 2, 3, 4, 5, 6, 7, 8 | 1, 2, 3 |
| 5. Describe and compare the cost flow assumptions used to account for inventories. | 5, 6, 7 | 9, 13, 14, 15, 16, 17, 18, 19, 20, 22 | 1, 4, 5, 6, 7 |
| 6. Explain the significance and use of a LIFO reserve. | | 21 | |
| 7. Understand the effect of LIFO liquidations. | | | |
| 8. Explain the dollar-value LIFO method. | 8, 9 | 22, 23, 24, 25, 26 | 1, 8, 9, 10, 11 |
| 9. Identify the major advantages and disadvantages of LIFO. | | | |
| 10. Understand why companies select given inventory methods. | | | |
ASSIGNMENT CHARACTERISTICS TABLE
Item | Description | Level of Difficulty | Time (minutes) | |
| E8-1 | Inventoriable costs. | Moderate | 15–20 | |
| E8-2 | Inventoriable costs. | Moderate | 10–15 | |
| E8-3 | Inventoriable costs. | Simple | 10–15 | |
| E8-4 | Inventoriable costs—perpetual. | Simple | 10–15 | |
| E8-5 | Inventoriable costs—error adjustments. | Moderate | 15–20 | |
| E8-6 | Determining merchandise amounts—periodic. | Simple | 10–20 | |
| E8-7 | Purchases recorded net. | Simple | 10–15 | |
| E8-8 | Purchases recorded, gross method. | Simple | 20–25 | |
| E8-9 | Periodic versus perpetual entries. | Moderate | 15–25 | |
| E8-10 | Inventory errors, periodic. | Simple | 10–15 | |
| E8-11 | Inventory errors. | Simple | 10–15 | |
| E8-12 | Inventory errors. | Moderate | 15–20 | |
| E8-13 | FIFO and LIFO—periodic and perpetual. | Moderate | 15–20 | |
| E8-14 | FIFO, LIFO and average cost determination. | Moderate | 20–25 | |
| E8-15 | FIFO, LIFO, average cost inventory. | Moderate | 15–20 | |
| E8-16 | Compute FIFO, LIFO, average cost—periodic. | Moderate | 15–20 | |
| E8-17 | FIFO and LIFO; periodic and perpetual. | Simple | 10–15 | |
| E8-18 | FIFO and LIFO; income statement presentation. | Simple | 15–20 | |
| E8-19 | FIFO and LIFO effects. | Moderate | 15–20 | |
| E8-20 | FIFO and LIFO—periodic. | Simple | 10–15 | |
| E8-21 | LIFO effect. | Moderate | 10–15 | |
| E8-22 | Alternate inventory methods—comprehensive. | Moderate | 25–30 | |
| E8-23 | Dollar-value LIFO. | Simple | 5–10 | |
| E8-24 | Dollar-value LIFO. | Simple | 15–20 | |
| E8-25 | Dollar-value LIFO. | Moderate | 20–25 | |
| E8-26 | Dollar-value LIFO. | Moderate | 15–20 | |
| P8-1 | Various inventory issues. | Moderate | 30–40 | |
| P8-2 | Inventory adjustments. | Moderate | 25–35 | |
| P8-3 | Purchases recorded gross and net. | Simple | 20–25 | |
| P8-4 | Compute FIFO, LIFO, and average cost. | Complex | 40–55 | |
| P8-5 | Compute FIFO, LIFO, and average cost. | Complex | 40–55 | |
| P8-6 | Compute FIFO, LIFO, and average cost—periodic and perpetual. | Moderate | 25–35 | |
| P8-7 | Financial statement effects of FIFO and LIFO. | Moderate | 30–40 | |
| P8-8 | Dollar-value LIFO. | Moderate | 30–40 | |
| P8-9 | Internal indexes—dollar-value LIFO. | Moderate | 25–35 | |
| P8-10 | Internal indexes—dollar-value LIFO. | Complex | 30–35 | |
| P8-11 | Dollar-value LIFO. | Moderate | 40–50 |



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