Mastering the Basics of Inventory Accounting (INV4)

Overview

While many entities maintain inventory, they are often challenged when applying the complexities of inventory accounting. The goal of this course is to provide a detailed overview of inventory accounting concepts that can be applied to a variety of inventory types. The course will cover the basics of inventory capitalization, for both book and tax, as well as the basic inventory valuation methods, LIFO, FIFO, weighted average, and specific identification. Then the course will give a more detailed review of the LIFO and retail methodologies. It will cover the topics of inventory obsolescence reserves and other issues related to inventory accounting, including a discussion of how COVID-19 has impacted these accounting considerations. This course will be the one-shop stop to get you up-to-speed on the accounting for this critical, revenue-producing asset.

Major Topics:

• Elements of inventory cost and full-absorption costing
• Valuation methodologies, including LIFO, FIFO, weighted average, and specific identification
• Obsolescence reserves
• LIFO accounting
• Differences between book and tax cost capitalization and related income tax accounting
• Retail inventory valuation methodology
• Physical inventory observation approaches
• Accounting issues related to consigned inventory
• Other challenging issues related to inventory accounting

Learning Objectives:

• Recall the elements of inventory cost for book and income tax accounting purposes
• Apply inventory valuation methodologies to various types of inventory
• Determine reserve methodologies for inventory obsolescence
• Determine appropriate inventory observation approaches
• Recall issues related to consignment inventory