Basic accounting, CIG, EAI, FB, MNG 2019 – 2020 Carmen Bonaci

carmen.bonaci@econ.ubbcluj.ro

Inventory elements: derecognition and measurement

At the time of their exit, the inventory and other fungible assets are measured and recorded in accounting
through applying one of the following formulas:

 First In – First Out – FIFO

 Weighted Average Cost – WAC
 Last In – First Out – LIFO

Case study no. 1: At the beginning of January N entity A has an initial flour inventory of 200 kg evaluated
at an actual cost of 46 lei/kg. The following transactions happen during the month with regard to the flour
inventory:
 07.01.N: acquisition 500 kg, actual cost 47 lei/kg;
 09.01. N: acquisition 300 kg, actual cost 49 lei/kg;
 12.01. N: consumption 600 kg;
 17.01. N: consumption 100 kg;
 20.01. N: acquisition 200 kg, actual cost 55 lei/kg;
 24.01. N: consumption 400 kg;
 27.01. N: acquisition 700 kg, actual cost 57 lei/kg;
 30.01. N: consumption 750 kg.

a. Establish the value of each flour consumption taking place during the month, the value of the
monthly flour consumption and the value of the closing flour inventory by applying the FIFO
formula in the month of January.
Crt. Entries Exits Inventory
No. Date Quantity Cost Value Quantity Cost Value Quantity Value
per unit per unit
0 1 2 3 4=2x3 5 6 7=5x6 8 9
1. 01.01.N Initial inventory 200 9.200
2. 07.01.N 500 47 23.500 700 32.700
3. 09.01.N 300 49 14.700 1.000 47.400
600 28.000 400 19.400
4. 12.01.N 200 46 9.200
400 47 18.800
100 47 4.700 300 14.700
5. 17.01.N

6. 20.01.N 200 55 11.000 500 25.700

400 20.200 100 5.500
7. 24.01.N 300 49 14.700
100 55 5.500
8. 27.01.N 700 57 39.900 800 45.400
750 42.550 50 2.850
9. 30.01.N 100 55 5.500
650 57 37.050
10. 31.01.N 1.700 89.100 1.850 95.450 50 2.850
Total

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Basic accounting, CIG, EAI, FB, MNG 2019 – 2020 Carmen Bonaci
carmen.bonaci@econ.ubbcluj.ro

The value of monthly flour consumption is: (sum of exits) 95.450 lei
The value of the closing flour inventory: 2.850 lei

b. Establish the value of each flour consumption taking place during the month, the value of the monthly flour
consumption and the value of the closing flour inventory by applying the WAC formula in the month of January.
Value of the existent inventory  Entry value
WAC 
Quantity in inventory  Entry quantity
Entries Exits Inventory
Crt.
Date Cost Cost per
No. Quantity Value Quantity Value Quantity Value WAC
per unit unit
7=5x
0 1 2 3 4=2x3 5 6 8 9 10 = 9/8
6

1. 01.01.N Initial inventory 200 9.200 46

2. 07.01.N 500 47 23.500 700 32.700 46,7142857

3. 09.01.N 300 49 14.700 1.000 47.400 47,4
4. 12.01.N 600 47,4 28.440 400 18.960 47,4
5. 17.01.N 100 47,4 4.740 300 14.220 47,4
6. 20.01.N 200 55 11.000 500 25.220 50,44
7. 24.01.N 400 50,44 20.176 100 5.044 50,44
8. 27.01.N 700 57 39.900 800 44.944 56,18
9. 30.01.N 750 56,18 42.135 50 2.809 56,18
31.01.N
10. 1.700 89.100 1.850 95.491 50 2.809 56,18
Total
The value of monthly flour consumption is: 95.491 lei
The value of the closing flour inventory: 2.809 lei

c. Establish the value of each flour consumption taking place during the month, the value of the monthly flour
consumption and the value of the closing flour inventory by applying the LIFO formula in the month of
January.
Crt. Entries Exits Inventory
No. Date Quantity Cost Value Quantity Cost Value Quantity Value
per unit per unit
0 1 2 3 4=2x 5 6 7=5x 8 9
3 6
1. 01.01.N Initial inventory 200 9.200
2. 07.01.N 500 47 23.500 700 32.700
3. 09.01.N 300 49 14.700 1.000 47.400
600 28.800 400 18.600
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Basic accounting, CIG, EAI, FB, MNG 2019 – 2020 Carmen Bonaci
carmen.bonaci@econ.ubbcluj.ro

4. 12.01.N 300 49 14.700

300 47 14.100
100 47 4700 300 13.900
5. 17.01.N

6. 20.01.N 200 55 11.000 500 24.900

400 20.300 100 4.600
7. 24.01.N 200 55 11.000
100 47 4.700
100 46 4.600
8. 27.01.N 700 57 39.900 800 44.500
750 42.200 50 2.300
9. 30.01.N 700 57 39.900
50 46 2.300
10. 31.01.N 1.700 89.100 1.850 96.000 50 2.300
Total
The value of monthly flour consumption is: 96.000 lei
The value of the closing flour inventory: 2.300 lei