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Questions and Answers
How are intangible assets described in the study material?
What is the main focus of Module-I in the study material?
What is the primary focus of Module-II in the study material?
Which accounting standards are covered in the study material for property, plant, and equipment?
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What type of assets cannot be seen and touched but still hold value?
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Which chapter in the study material focuses on property, plant, and equipment accounting standards?
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What does the matching concept prescribe for inventories?
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Which of the following is considered an intangible asset?
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What is the objective of the standard on accounting for inventories?
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Under which category are work in progress under a construction contract excluded from the scope of inventory accounting?
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What does the term 'net realizable value' refer to?
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What does the cost of inventories comprise of?
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Which component must inventories be measured at, according to the standards?
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What are examples of inventories?
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What does 'materials to be used in the production process' refer to?
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In what circumstances should inventories be accounted for as an expense?
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Study Notes
Intangible Assets
- Intangible assets are non-physical assets that hold value, such as patents, trademarks, and copyrights.
Module-I Focus
- Focuses on foundational concepts of financial accounting and the understanding of financial statements.
Module-II Focus
- Concentrates on advanced accounting topics, including specific accounting standards and practices.
Accounting Standards for Property, Plant, and Equipment
- Covers applicable international standards such as IAS 16 or relevant national standards that dictate the recognition and measurement of property, plant, and equipment.
Types of Intangible Assets
- Assets that cannot be seen or touched but still hold significant value are categorized as intangible assets, like intellectual property and goodwill.
Chapter on Property, Plant, and Equipment
- A specific chapter outlines the accounting standards for property, plant, and equipment, detailing recognition, quantification, and depreciation.
Matching Concept for Inventories
- Prescribes that expenses associated with inventory should be recognized in the same period as the revenues that are generated from the sale of those inventories.
Examples of Intangible Assets
- Considerations include franchises, software, and research and development costs.
Objective of Inventory Accounting Standards
- Aims to outline the procedures for measuring and reporting the value of inventories to reflect their fair value in financial statements.
Work in Progress Exclusion
- Work in progress under a construction contract is excluded from inventory accounting standards, recognizing it separately for specific project accounting.
Net Realizable Value
- Refers to the estimated selling price in the ordinary course of business minus any expected costs of completion and disposal.
Cost of Inventories Components
- Comprises all costs of purchase, conversion, and other costs incurred to bring the inventories to their present location and condition.
Measurement of Inventories
- According to standards, inventories must be measured at the lower of cost and net realizable value.
Inventory Examples
- Typical examples of inventories include raw materials, work in progress, and finished goods.
Materials in Production Process
- Refers to raw materials that are intended for use in manufacturing or production activities within a business.
Accounting for Inventories as Expense
- Inventories should be accounted for as an expense when they are sold or when they are otherwise written down due to obsolescence or damage.
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Description
Access study material for the Corporate Accounting course (BC3B04) offered by the University of Calicut, School of Distance Education. This study material is designed for B.Com students enrolled from the 2017 admission onwards.
