Cedar Trail's count team finds 70 units in the warehouse. The draft closes the ledger at 70 units and starts a FIFO schedule. But one pallet belongs to a supplier, Cedar Trail owns goods at a consignee and with a carrier, and the last receiving report was posted in January. Seventy is a fact about location, not yet a reporting-date inventory conclusion.
This module builds the close in an order a reviewer can defend. It covers rights and cutoff, quantities, qualifying cost, recordkeeping, cost flow, subsequent measurement, estimates, error effects, and disclosure. Each handoff retains the source document and the unresolved fact. Formula work begins only after the population and cost pool are explicit.
Lessons 2–4 reuse one dated 240-unit stream so method differences are visible. The later measurement, commitment, and estimation lessons switch to separate stipulated items; their numbers are not extensions of that cost-flow stream.
One calculation, several unproved judgments
The checked Cedar Trail example recomputes six cost-flow schedules, two lower- of-cost paths, two inventory estimates, and a multi-period error map. A green reconciliation establishes that the supplied units and dollars were processed as declared. It cannot establish ownership, cutoff, qualifying cost, method authorization, market evidence, estimate relevance, or disclosure compliance.
Reporting bases do not share one blended rule
The US-GAAP sequence uses two explicit routes. Inventory measured by a method other than LIFO or the retail inventory method is compared with NRV. Inventory measured using LIFO or the retail method is compared with designated market, which constrains replacement cost between an NRV ceiling and an NRV-less-normal- profit floor. The IAS 2 comparison is a separate research column: FIFO and weighted average are in its ordinary interchangeable-item formula set; LIFO is not. The module compares those decisions without presenting either basis as a shortcut for the other.
Module outcomes
Establish an owned reporting-date inventory population from contracts, movement records, physical counts, goods in transit, and consignment evidence before assigning cost.
Classify qualifying inventory cost and prepare controlled periodic and perpetual specific-identification, FIFO, weighted-average, and LIFO schedules with unit and cost reconciliations.
Apply the correct US-GAAP lower-of-cost measurement path, evaluate purchase commitments, and use gross-profit or retail estimates only within supported purposes and limitations.
Trace inventory errors across statements and periods, reconcile the inventory note to its evidence, and keep US-GAAP and IAS 2 conclusions visibly separate.
Learning sequence
Follow the dependency order, or open the lesson you need.
- Lesson 1Prove ownership and cutoff before pricing the count
- Lesson 2Build qualifying cost and recordkeeping control
- Lesson 3Trace specific units and FIFO layers
- Lesson 4Compute periodic and moving average without rounding drift
- Lesson 5Build LIFO layers and a qualified comparison
- Lesson 6Route subsequent measurement before comparing amounts
- Lesson 7Record write-downs and keep purchase commitments separate
- Lesson 8Estimate inventory with gross-profit and retail evidence
- Lesson 9Trace inventory errors across statements and periods
- Lesson 10Reconcile the inventory note and reporting basis
- Lesson 11Resolve transit and count differences
- Lesson 12Build and review a dollar-value LIFO pool
Capstone and summative assessment
Use the cumulative case first, then test each transfer without exposing answer keys.