Inventory Accounting in Harris Technology Group Limited

07 February 2019
Business Accounting
Harris Technology Group Limited

ESSAY 1
The company Harris Technology Group Limited is engaged in the business of the technology
distribution and the online retailing in Australia. The company was found in the year 1986,
and engages in the online retail sale of baby and mother care products and IT products (Harris
Technology Group Limited, 2019). In addition, the company is involved in the import and
distribution of the computer accessories to resellers and retailers. The company operates
through the two chief online chains namely the “Harris Technology” and the “Wow Baby.”
The following segment aims at describing the company’s compliance with the reelevenat
accounting standard for the inventory. The accounting standard AASB101 Presentation of
Financial Statements, states the current assets to be the assets, which are held by the company
for the primary purpose of selling (AASB, 2015a). In addition, these include the assets, which
the company expects to be sold, consumed, or realised in the company’s normal operating
cycle. Further, the current assets are inclusive of the assets that the entity expects to realise
within the twelve months after the reporting period. Thus, as per the definition, the inventory
is to be classified as the current assets. Accordingly, the company Harris Technology Group
Limited classifies its inventory as the current assets. The AASB 102, Inventory in financial
reporting and business practices in Australia, governs the recognition, accounting treatment,
classification and the presentation of the inventory (AASB, 2015b).
The paragraph 6 of the AASB 102 defines the term inventory to be the assets held by the
entity for the purpose of sale in the ordinary course of its business operations. The inventory
definition is also inclusive of the assets held for the production of the above stated and the
consumables to be used in the various processes. The paragraph 8 of the said accounting
standard further prescribes the assets purchased and held for resale. Thus, the major
inventories of the company include the computers, accessories, printers, computer
peripherals, software, mobiles, and tablets under the technology domain. The inventory in
mother and baby care domain includes the baby accessories, toys, baby furniture, travel
essential, and others. The company primarily holds these for the purpose of retailing and
reselling, thus connecting the suppliers and the customers to each other. Thus, it can be stated
that the recognition of the products held for resale as the inventory are in accordance with the
compliance with the AASB 102. The measurement of the inventories is governed by the
paragraph 9 of the accounting standard. The paragraph states that the inventory must be
measured at the lower of cost and net realisable value. The inventory held by the company as
on 31 December 2017, as per the half-year reports and the annual accounts was $ 6,127,805