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Imagine that you are an employee of Tata Motors Company and being working in this company for last 10 years as a store keeper. Therefore, the company thought you are the right person in this field to study the detailed regarding the benefits and drawbacks of FIFO and weighted method of inventory valuation under different economic situations.
i. You are required to provide the necessary information on the inventory valuation under two methods and submit it to the company as per BAS 2. ii. You are required to provide recommendations so that the company can take it and improve on the existing system of inventory valuation. iii. The company has also expected the following information from your report:
Problem a. Suppose the company faced the normal and abnormal loss, explain the concept of normal and abnormal loss in your own words with the help of small scenarios.
Problem b. Advise the company, with reasons and an example of each, on the method of inventory valuation applicable when there is inflation and deflation. (Examples need to be explained in the form of a small business scenario).
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