Subject:Latest research regarding inventory valuation, purchase commitments and executory contracts.

One important element of the financial statements is the volume of goods, whether it is goods finished or raw materials, i.e. the inventory. It helps to determine the cost of goods sold and allows matching of that with the revenues that it generates to give us a reliable realized income value. For a company such as Lotza Inventory Inc, it is likely that they hold large volumes of inventory that was purchased at different prices. To specifically identify the cost of individual items sold in order to obtain the precise cost of inventory would not only be expensive, but almost impossible. Typically, in these situations one of several cost flow assumptions is made, e.g. last-in-first-out (LIFO), first-in-first-out (FIFO) or weighted average. It is not necessary to select an assumption that is consistent with the physical movement of goods, however, it is necessary to choose the assumption which most clearly reflects the periodic income of the company. Several points must be carefully consi...