materials and capital equipment, and to put it simply, stocks of goods and raw materials in stock
make up a large part of the assets of almost any enterprise.They also represent the
and the bulk of the costs.In addition, their structure has a decisive impact on the financial results of operations.
As a rule, tangible assets are purchased batches available in the balance sheet at different times and, consequently, the price may not be the same.
time later capitalized stocks transferred to the production, sales or other disposal.At this point, economists are very important to properly assess the value of the released values.
methods of stock assessment
Currently, there are several ways to estimate the cost of property transferred:
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cost of each unit.
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at weighted average cost.
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As the cost of first-time purchase of tangible assets (FIFO).
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As the cost of the most recent acquisition of tangible assets (LIFO).
written off should be remembered that the same method will be applied in the tax account.
correct choice of method
As a rule, order inventory write-downs set of internal company policy.Thus different types of values can be charged by different methods.But for the same nomenclature inventory method is unchanged.
In today's increasingly widespread accounting methods one and two.
FIFO and LIFO cause a lot of questions economists and business leaders.However, do not take them into consideration would be a serious omission.
example, the FIFO method - is a great opportunity to improve the company's image in the eyes of its partners.Calculate the cost of products released with it performed quite simply, we need only understand the key points.
First In, First Out
first come-first-out, since in English the decrypted four letters, which are represented by the FIFO method.
This assessment departures of goods based on the assumption that the first transmission in the production (or for other purposes) values previously set for the arrival of others.That is, the goods are released exactly in the sequence in which came to the warehouse.
easier to remember that it is the FIFO method means using everyday examples.Imagine a large stack of anything.Let it be the statements of applicants in the selection committee of the university.Every day, on top of the stack is put more and more filled with blanks, but considered in the first place will be lower, as they have been filed earlier, despite the fact that on them has accumulated a pile of new ones.And those products are written off at first that arrived at the warehouse before others with the same nomenclature.
Each batch of material and production values to be displayed in the account as a separate group, if it will later be applied FIFO method.This condition is mandatory, even if such goods nomenclature were previously capitalized.
When the FIFO method is applicable
examples of the most successful use of this method - writing off perishable goods.We are talking about food (vegetables, fruits, dairy products) or raw material with a limited shelf life.To avoid damage primarily to be implemented (or recycled) previously received stocks.
Drawbacks FIFO
Since vlyaniem by inflation over time, the purchase price may increase, taking into account the FIFO cost of goods may be tempered somewhat understated.This contributes to artificially high financial results of operations and, as a consequence, increase the size of the income tax.
Benefits FIFO method
artificially inflated earnings - the main plus, which gives the company the FIFO method.It is at first glance surprising, because the same factor has been recorded and disadvantages.However, the great success of the enterprise increase its credibility and attractiveness of the new contracts, attracting investors.
FIFO method.Example solutions
Calculate the cost of inventories, retired from the warehouse, it is possible in two ways:
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calculated the total value of all stocks of the nomenclature, capitalized stock for the entire period, and it is subtracted from the cost of material resources at the end of the reporting period.
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calculation is made on the basis of the unit price in the first (time) the party, if the stock of the proceeds do not cover the disposal of fully taken into account the cost of goods in the second, the third installment and so on. D.
poring both options helpsimple task.
company comes at the price of the goods supplier, and cancellation is made from the warehouse using the FIFO method.
At the beginning of the reporting period, the company stock on the remaining 100 boxes of nails at the price of 300 rubles each.Total tangible assets in the amount of 30 000 rubles.
Within a month the warehouse has received two shipments of nails at the following prices: 120 boxes of 400 rubles and 200 boxes of 450 rubles.In the same period, production from a warehouse dropped to 180 boxes of nails.
In accordance with the rules of writing off using the FIFO method, we assume that it was spent 100 boxes of nails at 300 rubles ($ 30 000) and 80 boxes of 400 rubles ($ 32 000).
At the end of the month in the warehouse are 40 boxes of 400 rubles ($ 16 000), and 200 boxes of 450 rubles ($ 90 000).
perform the calculation, using the first method.We calculate the average value of the remaining stock of boxes:
(16,000 + 90,000) / (40 + 200) = 441.66 rubles.
resulting value is multiplied by the amount of stock on hand at the end of the reporting period:
441,66 * (40 + 200) = 105 998.40 rubles.
To simplify calculations round off the amount received up to 106 000 rubles.
calculates the cost of the retired warehouse values:
((100 * 300) + (120 * 400) + (200 * 450)) - 106 000 or 62 000
Total for the period from the warehouse retired 180 boxes of nailstotaling 62 000 rubles.Consequently, the average cost of one unit was 345 rubles.
Now once again perform cost calculation departures of goods, using the second method.In this case, the calculation will be simple and less time to be taken away.
100 * 300 + 400 * 80 = 62,000 rubles.
Cost of one unit also released was 345 rubles.
results of the calculations are the same, and this proves that both methods are correct.
This example is quite simple, so it was easier calculates the second embodiment.But if you want to account a large range of goods that enter in the books and releases during the reporting period several times, will come to the aid of the first version of the calculation using the FIFO method.
LIFO method
This method of accounting is a complete contrast to the FIFO method.Also, as in the last, each new shipment comes as a separate group.However, the write-off of property disposed of is taken into account, first of all, the unit cost of the last party arrived.
compare the LIFO method to the familiar stack of applications.Now a member of the selection committee will process the documents from the top.
LIFO method is most effective in the context of growing inflation.In this case, displayed in reporting the financial results will be more realistic, and the company will not have to pay taxes at exorbitant rates.
Based on the above written, we can say that the FIFO method - is a convenient and effective method of accounting material and production values, retired from the warehouse of the enterprise in the reporting period.Of course he was not deprived of a number of shortcomings, but in certain situations, its use brings unexpected benefits.
professional economists must masterfully wield all four methods of accounting.
