Great video thank you. I do have a question about the year 1 so when using the buying price is that the cost @ which you get it or the cost @ which you will sell it?
Hello Mr. Barnett, Just discovered your channel, where were you all my accountant life? I am having that issue where I am working on a company and it's their 1st year in business. I have Beginning Inventory and purchases but no ending inventory(The owners didn't do a physical count nor do they have an inventory tracking system). Can you tell me the best method to estimate the Ending Inventory?
Inventory is usually valued at cost unless there are some older items which you may negotiate to discount. When there are a lot of items and little computer records we sometimes use an inventory counting firm who gives us the retail value of the inventory then you need to adjust for the markup by department. Hope that helps. If the business is a poor one, sometimes the whole inventory is discounted to get the business to sell.
Great video thank you. I do have a question about the year 1 so when using the buying price is that the cost @ which you get it or the cost @ which you will sell it?
Inventory is always counted at cost unless there is a reason to 'write down' the value. ie old, damaged, etc.
@@DavidCBarnett thank you so much
Hello Mr. Barnett, Just discovered your channel, where were you all my accountant life? I am having that issue where I am working on a company and it's their 1st year in business. I have Beginning Inventory and purchases but no ending inventory(The owners didn't do a physical count nor do they have an inventory tracking system). Can you tell me the best method to estimate the Ending Inventory?
If it's their first year, you could use the average markup and their sales to try and guess the cost of what they sold. ergo what is left over.
How do you value inventory when purchasing the a business based on the inventory value?
Inventory is usually valued at cost unless there are some older items which you may negotiate to discount. When there are a lot of items and little computer records we sometimes use an inventory counting firm who gives us the retail value of the inventory then you need to adjust for the markup by department. Hope that helps. If the business is a poor one, sometimes the whole inventory is discounted to get the business to sell.
Thanks David. Very useful information as usual.
Thanks Victor