Question

Question 4

Tesco (M) Berhad reported inventory in its Statement of Financial Position as at 31^st December 2017 as follows:

Inventories………………………………………RM2,430,000,000.

Required:

What additional disclosures might be necessary to present the inventory of Tesco (M) Berhad fairly?  

Answer 1

Solution:

Disclosures are very useful of financial statements, especially when analyzing a company’s performance.

Under US GAAP, the following financial statement disclosures in relation to inventories are required:

- The accounting policies that were adopted in measuring inventories, including the cost formula used;

- the carrying amount of inventories that are carried at fair value less the cost to sell;

- the total carrying amount of inventories and the carrying amount in classifications that are appropriate to the entity;

- the amount of inventories that are recognized as an expense during the reporting period;

- the carrying amount of inventories that are pledge as security for liabilities

- the amount of any written down of inventories that are recognized as an expense in the reporting period;