Problem:
Nancy Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Nancy's inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this significant market event.
Question 1. Identify the primary authoritative guidance for accounting for inventories. (Provide the codification reference.)
Question 2. What is the predecessor literature? (Hint: ARB)
Question 3. List three types of goods that are classified as inventory. What characteristics will automatically exclude an item from being classified as inventory? Cut and paste from the ASC and provide citation, but be sure to also read what you are cutting and pasting.
Question 4. Define "market" as used in the phrase "lower-of-cost-or-market." Cut and paste from the ASC and provide citation, but be sure to also read what you are cutting and pasting.
Question 5. Explain when it is acceptable to state inventory above cost and which industries allow this practice. Cut and paste from the ASC and provide citation, but be sure to also read what you are cutting and pasting.