Happlia Co. imports household appliances. Each model has many variations and each unit has an identificationnumber. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. Afterrepackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance fromHapplia, and pays the balance due within one week.To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas Cityretailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment.Happlia uses the specific identification inventory costing method.Required:1. In regard to the specific identification inventory costing method:a. Describe its key elements.b. Discuss why it is appropriate for Happlia to use this method.2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018?b. Give four examples of costs included in these inventory carrying amounts.3. What costs should be reported in Happlia’s 2018 income statement? Ignore lower of cost or marketconsiderations.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Happlia Co. imports household appliances. Each model has many variations and each unit has an identification
number. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. After
repackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance from
Happlia, and pays the balance due within one week.
To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas City
retailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment.
Happlia uses the specific identification inventory costing method.
Required:
1. In regard to the specific identification inventory costing method:
a. Describe its key elements.
b. Discuss why it is appropriate for Happlia to use this method.
2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018?
b. Give four examples of costs included in these inventory carrying amounts.
3. What costs should be reported in Happlia’s 2018 income statement? Ignore lower of cost or market
considerations.

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