First In, First Out (FIFO) Inventory Costing

The First In First Out (FIFO) is a method for asset management that ensures assets we produce or acquire first are the ones we use or sell first. Under FIFO, we include the oldest assets’ cost in the Cost of Goods Sold (COGS) line item on the Income Statement. How does FIFO work? FIFO supports […]

How to Perform Net Realizable Value (NRV) Analysis

Accounting standards (IRFS and US GAAP) require that we apply a conservatism principle when we assess the value of assets and transactions. The Net Realizable Value (NRV) is the amount we can realize from an asset, less the disposal costs. The most often use of the method is when we evaluate inventory and accounts receivable […]

Obsolete Inventory and How to Deal With It

Most companies in the manufacturing and retail industries have Inventory. Slow-moving and obsolete Inventory can have a severe adverse effect on the profitability of the business. When we can’t realize our goods on hand, they lose value and may become useless for the company. To account for this decrease in value, we write down or […]