Inventory Management Methods and Their Implications

Running Head: INVENTORY 0
Inventory

INVENTORY 1
Contents
Question 1....................................................................................................................................2
Question 2....................................................................................................................................2
Question 3....................................................................................................................................3
Question 4....................................................................................................................................4
References........................................................................................................................................6

INVENTORY 2
Question 1
According to the AASB 102, followed by the Telstra Corporation the inventory is classified as
the assets which are kept for the purpose of the sale in the course of operating the ordinary
business, in the process of the production and the sale of the business or also in the form of
materials or supplies (Telstra, 2018). The inventories are measured at the cost or the net
realizable value as it can be observed from the annual report of the Telstra. Further as per the
AASB 102, inventory the cost of the inventories shall comprise of all the purchase and the
replacement costs to bring the inventory in such a situation that can be treated as the inventory in
the usable condition. Hence, according to the Telstra and in alignment of the AASB 102, the
inventory is calculated at the cost or the realizable value whichever is lower (Wild, 2017).
Question 2
Perpetual inventory method is used by the Telstra Company as this method is used to record the
sale or the purchase of the inventory on the immediate basis. Through the use of the perpetual
inventory system the company is going to get the enormous benefits hence the perpetual
inventory system will not only help the organization in enhancing the systems of production.
The perpetual inventory helps the Telstra in evaluating the quick valuation of the inventory on
account of continuous stock taking. It helps in the preparation and the presentation of the profit
and loss account with the great ease by the accountants. Also by introducing the perpetual
inventory system the regular supervision can be undertaken. This considerably reduces the
investment in materials and the storage expenses. This method is also helpful in formatting the
proper policies for the purchase of the stock (Center, Alliance and Insurance, 2016). This method
not only helps in the immediate detection of the errors and the misrepresentation, it is also