Inventories Research Essay

1. SUMMARYIn this research, radical members are required to take in any company from bursa Malaysia and study about their inventories, during this coursework, we mainly focus on the general study about inventories and the inventories of the company- Ajinamoto2. INTRODUCTIONInventories refer to a companys merchandise, raw materials, and finished and unfinished products which have not yet been sold. These are considered liquid assets. There are various means of valuing these assets, but to be nonprogressive the lowest value is usually used in financial statements. The LCM rule is applied.3. CONTENT* Types of inventoriesThere are mainly 5 types of inventories for Ajinomoto raw materials (eg. knifelike husk monosodium glutamate etc.) amounting to RM34,445,868, consumables amounting to RM 4,536,693, work-in-progress amounting to RM2,374,316, and finished goods amounting RM21,445,751. These are the closing inventories for Ajinomoto* Manufacturing process.Ajinomoto uses green technology such as bio-cycle technology which improves amino acid, maximizing the usage of natural resources, such as water and energy, the above diagram show the manufacturing process. The main raw materials are raw husk.* Valuation methodsAjinomoto uses weighted average method. Inventories are stated at the vex down of cost and net realisable value. Cost incurred in bringing the inventories to their present location and condition are accounted for as follows * Raw materials purchase costs on a weighted average method. * Finished goods and work-in-progess costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.These costs are charge on a weighted average method.Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of termination and the estimated costs necessary to make the sale.* Amount of Closing InventoriesThe amount of closing inventories is RM 62,802,628. This can be a cquired from the financial statement of Ajinamoto of year 20114. ADDITIONAL CONTENT* FIFO(First In First Out) is an asset-management and valuation method in which the assets acquired first are sold, used or disposed of first. FIFO may be used by an singular or a corporation. For taxation purposes, FIFO assumes that the assets that are remaining in inventory are matched to the assets that are most recently purchased or produced.* Weighted average Cost is a method of calculating Ending Inventory cost. Inventory valuation method used where different quantities of goods are purchased at different whole costs. Under this method, weights are assigned to the cost price on the basis of the quantity of each item at each price. It is also known as AVCO It takes Cost of Goods Available for Sale and divides it by the total amount of goods from Beginning Inventory and Purchases.* Taxation is a means by which governments finance their expenditure by imposing charges on citizens and corporate ent ities. Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs.5. ConclusionAfter done this research, my group members and I addd our knowledge and comprehension about the companys annual report. This can help us more understand about the account statement for inventories. This are useful for us as a future accountants. We get more extra information that cant learn from the class. It also increase our leadership and communication skills with other group members. Besides that, before start our assignment we also learn how to build up a group successfully. We put a lots of efforts and times in order to make this assignment more wonderful. We sincerely hoped that our efforts is worthful.6. Referencehttp//www.ajinomoto.com/about/history/index.htmlhttp//www.ajinomoto.com/about/htt p//www.ajinomoto.com/ir/ var./info.htmlhttp//www.ajinomoto.com/ir/financial/financial_summary.html http//www.investorwords.com/2589/inventory.htmlhttp//www.businessdictionary.com/definition/taxation.htmlhttp//www.businessdictionary.com/definition/weighted-average-cost-of-inventory.html http//www.investopedia.com/terms/i/inventory.aspaxzz1fSj9WniT http//www.ehow.com/ehow_radlinks_ads.html?term=Inventory+Example&channel=biz_business_management,text,suggested5&google_rt=ChBOiX2xAAdWbgriAMoOXR1TEhFJbnZlbnRvcnk http//www.agecon.purdue.edu/crd/localgov/Second%20Level%20pages/topic_inventory_tax.htm