Storage cost of part-finished goods B This cost formula assumes that the items of the inventory that were purchased or produced first are sold first and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced.ĭ. D Which of the following should be taken into account when determining the cost of inventory?ĭ. Assets held for sale, in the process of production, or in the form of materials or supplies to be consumed in the production process. Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.ĭ. Assets used in the production or supply of goods and services for administrative purposes.Ĭ. The write-down impacts the balance and income statement of a companyand ultimately affects the business’s net income and retained earnings. Tangible assets held for sale in the ordinary course of business, in the process of production, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.ī. An inventory write-down is the required process used to reflect when an inventory loses value and its market value drops below its book value. Loss method C Inventories are defined asĪ. Loss method and cost of goods sold methodĭ. B Which method may be used to record a loss due to a price decline in the value of inventory?ī. Result in a higher ending inventory than a periodic inventory system. Result in the same ending inventory as a periodic inventory system.ĭ. Result in a lower ending inventory than a periodic inventory system.Ĭ. Increase and No effect C During periods of rising prices, when the FIFO inventory cost flow method is used, a perpetual inventory system wouldī. LIFO D Theoretically, how should warehousing cost and interest on inventory loan affect the cost of inventory, respectively?ĭ. ![]() C Which of the following inventory method reports most closely the current cost of inventory?ĭ. Gives the lowest valuation if applied to the total inventory. Gives the lowest valuation if applied to individual item of inventory.ĭ. Gives the lowest valuation if applied to major group of inventory.ī. A loan or portfolio of loans may also need to be recorded on the balance sheet as a result of applying the guidance in ASC 810, Consolidation. Loans may be purchased individually, in pools, or as part of a business combination. B Lower of cost and net realizable valueĪ. Unlike IAS 2, under US GAAP, a write down of inventory to NRV (or market) is not reversed for subsequent recoveries in value unless it relates to changes in exchange rates. A loan receivable is recorded for loans that a reporting entity originates or purchases. Reversal of inventory writedown is prohibited. Entities are required to record writedown in a separate loss account.ĭ. Separate reporting of reversal of inventory writedown ?is required.ī. ![]() A Which of the following statements is true regarding inventory writedown and reversal of writedown?Ī.
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