FIN621 Financial Statement Analysis GDB No.2 Solution Fall Semester 2013

Financial Statement Analysis (FIN621)

Total Marks 30

Topic/Area for Discussion: “Inventory Valuation Methods”

This Graded Discussion Board will cover first 30 lessons.

Discussion Question:

Muhammad Bazil Hassan is a renowned artist and famous for his spiritual and mystical paintings. He has been working as an artist for the past ten years. He has organized many successful exhibitions locally and globally. Recently, one of his paintings titled “The real glory” earned much fame in the Global Paintings Competition held in a country which is known globally for her enriched culture among the region’s neighboring countries.

To do his work professionally, Bazil has set up Painting Art Gallery to manage his paintings’ business. Here, he has a good collection of paintings. At present, this art gallery has an inventory of more than 100 paintings - No two are alike. The least expensive item is priced at Rs. 110,000 and the higher- priced item carry price of Rs. 1,275,000. This high cost is primarily due to the usage of high quality imported painting materials.

To manage its financial matters, Bazil has recently appointed a business graduate in his Gallery as Senior Account’s Manager. The account’s manager is thinking about the method of inventory valuation being the most appropriate one for this particular art business, as the paintings are of unique nature.

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Requirement: Recommend the Manger the method that could serve his purpose. Support your answer with logical reasons.