Johnstone Timber is a logging entity that sources its timber primarily from the Ardennes Forest. To maintain efficiency in its logging operations, Johnstone has its loggers apply chain grease and use special steel dowels to sharpen their blades and after every tree they fell. Johnstone considers the grease and sharpening dowels to be peripheral items. Therefore, they do not count as inventory.

Question

Quizplus · Accepted Answer

Inventory includes all goods and materials a company holds for the purpose of resale, production, or repair in the normal course of business. The chain grease and steel dowels, being essential for maintaining the equipment used in logging operations, should be considered as inventory under supplies or maintenance inventory, as they are consumed in the process of producing the main inventory items (timber).

Johnstone Timber Is a Logging Entity That Sources Its Timber