Inventories can be calculated by FIFO,LIFO etc..

Introduction:
In accounting, different entities may adopt different accounting policies based on their specific circumstances and requirements. These policies guide how various transactions and events are recognized, measured, and presented in the financial statements. The area wherein different accounting policies can be adopted are valuation of inventories, retirement benefits, and treatment of goodwill.

Valuation of Inventories:
Inventories are assets held for sale in the ordinary course of business or in the process of production for such sale. The valuation of inventories can be done using different methods, such as:

1. First-in, First-out (FIFO): Under this method, the cost of the first units purchased or produced is allocated to the units sold first. This can result in different inventory valuations compared to other methods.

2. Last-in, First-out (LIFO): This method assumes that the most recently purchased or produced items are sold first. LIFO can produce different inventory valuations compared to FIFO and impact the cost of goods sold and ending inventory.

3. Weighted Average Cost: This method calculates the average cost of inventories based on the weighted average of the costs of all units available for sale during the period. It can result in different inventory valuations compared to specific identification or other methods.

Retirement Benefits:
Retirement benefits refer to the compensation that employees receive after their employment ends. Different accounting policies can be adopted in the recognition and measurement of retirement benefits, such as:

1. Defined Benefit Plan: This plan provides employees with a predetermined retirement benefit based on factors like salary, years of service, and age. The accounting policy may involve actuarial valuations, discount rates, and assumptions about future salary increases and mortality rates.

2. Defined Contribution Plan: This plan involves the employer making contributions to a separate fund, such as a pension fund or a provident fund, on behalf of the employees. The accounting policy may include recognizing these contributions as expenses and measuring the obligations based on the contributions made.

Treatment of Goodwill:
Goodwill represents the value of an acquired business beyond its identifiable net assets. The treatment of goodwill can vary based on the accounting policies adopted. Some common policies include:

1. Amortization: Goodwill is systematically amortized over its estimated useful life. The amortization expense is recognized in the income statement and reduces the carrying amount of goodwill.

2. Impairment Testing: Goodwill is tested for impairment annually or whenever there is an indication of impairment. If the carrying amount exceeds the recoverable amount, the goodwill is written down, resulting in a loss.

3. Non-Amortization: In some cases, entities may choose not to amortize goodwill but instead test it for impairment only. This policy allows goodwill to remain on the balance sheet indefinitely, subject to impairment testing.

Conclusion:
In conclusion, the area wherein different accounting policies can be adopted include the valuation of inventories, retirement benefits, and treatment of goodwill. These policies can significantly impact the financial statements and the reported results of an entity. It is essential for entities to carefully consider the accounting policies they adopt to ensure transparency, comparability, and compliance with relevant accounting standards.