Asset Valuation

Asset Valuation

Team A's car dealership is a profitable venture. The lot of land is located in a prime location, and it was fortunate to obtain a sizeable parcel, which is perfect for the large fleet of cars it keeps on hand. The dealership sells new and used cars and also repairs cars and sells parts. There are three main parts to the business; the car dealership, the repair shop, and the body shop, each with an inventory of items and assets that need to be accounted for regularly.

Inventory Policies

With price changes in similar products occurring throughout the year, it becomes difficult to determine the value of goods. How should these values be determined? A company must choose the most applicable cost flow assumption to its specific inventory. These cost flow assumptions include:

1. First in, first out (FIFO). FIFO is the assumption that the first goods bought

are