(a) What is the definition provided for inventory? (b) What is a customer? (c) U
ID: 451794 • Letter: #
Question
(a) What is the definition provided for inventory?
(b) What is a customer?
(c) Under what conditions is a distributor considered a customer?
(d) What is a product financing arrangement? What inventory measurement issues are raised through these arrange-
ments?
CE8-2 Due to rising fuel costs, your client, Overstock.com, is considering adding a charge for shipping and handling costs on products sold through its website. What is the authoritative guidance for reporting these costs?
CE8-3 What guidance does the Codification provide concerning reporting inventories above cost?
CE8-4 What is the nature of the SEC guidance concerning the reporting of LIFO liquidations?
Explanation / Answer
Inventory- Is the stock of any kind of goods and material which the organization holds for the purpose of resale or repair.
Customer - AA customer is an individual or organization which buys goods and service from another organization for the exchange of some value. Customers can be retail customers or business customers.
A distributer can only be considered a customer if he takes the legal title of the goods he possesses.
Product Financing Arrangement - It exists when there is a price guarantee for the reseller of the product. The original seller promises to pay the reseller the difference between selling price and the price on which the reseller sold the product to other customer. There are various inventory measurement issues -
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