AVERAGE AGE OF INVENTORY is calculated by the formula: 365 / inventory turnover.
FRS 11 sets out the principles and methodology for accounting for impairments of fixed assets and goodwill. It replaces the previous approach whereby diminutions in value were recognized only if they were regarded as permanent. Instead, the carrying amount of an asset is compared with its recoverable amount and, if the carrying amount is higher, the asset is written down.
DUAL PURPOSE TEST is when audit procedures are classified both as substantive tests and tests of controls. When an audit procedure provides both types of evidence it is a dual purpose test.
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