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INITIAL MEASUREMENT OF INVENTORY – STUDY OF PRACTICAL APPLICATION IN CZECH LEGISLATIVE CONDITIONS
Abstract
Influence of globalization permeates all areas of human activity, it is the matter of technology and human knowledge transfers. Thus it is obvious, that European Union's membership enables rapid development of merger states. Under the economic activities of companies in the international environment, exchange of goods and services becomes an integral part of their economic life and brings necessity for the proper measurement of imported assets, as their value will have a subsequent impact on the reported financial position and performance of the company. This paper deals with the initial inventory measurement. The first part of the contribution is a literature search on the topic and reviewing the current level of knowledge of the issue. The second part of the paper brings a comparative analysis of selected impacts on the inventory measurement and it is primarily addressed to the impact of the chosen methodology of the currency rate's conversion in Czech legislative conditions - in this case the Czech crown and Euro – when the inventory (namely merchandise) is imported. This problem is illustrated in a case study of an existing merchandising company; current methodology used by the firm is compared with other options, results are discussed from their impact on financial reporting point of view. Secondarily, the issues of transportation costs as a component of the acquisition cost in the appointed company are discussed.
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References6
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Chung, J. O. Y, Cohen, J. R. & Monroe, G. S. The Effect of Moods on Auditors' Inventory Valuation Decisions. Auditing-a Journal of Practice & Theory, vol. 27 /issue 2, pp. 137-159, 2008.
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Act No. 563/1991 Coll., on Accounting, Ministry of Finance, Czech Republic.
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