Chp 9 example #34535

True, The lower of cost or market rule charges the loss of utility against revenues in the period when the loss occurs, not in the period of sale.

False, The indirect method uses a separate contra account and loss account to record the write-off. The direct method substitutes the lower market value figure for cost when valuing inventory.

replacement cost, The term market generally means the cost to replace the inventory item.

future utility will be less than their cost, To preclude overstating assets, the lower of cost or market (future utility) is used for inventory valuation.

mated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, Market cannot be greater than the estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.

there is a controlled market with a quoted price. the inventory consists of precious metals or agricultural products. there are no significant costs of disposal. all of these.

True, The cost of a basket purchase is allocated among the units on the basis of relative sales value.

When purchasing a group of varying units.

Petroleum, The petroleum industry uses the relative sales value method extensively. because of the many products and by products obtained from a barrel of crude oil.

this fact must be disclosed.

in the period a decline in market price occurs.

under Other Expenses and Losses.

False, The gross profit method uses prior period records and company policies to determine mark-up.

False

annual financial statements, because it is an estimated ending inventory

particularly useful for any type of interim report, because such report usually need a fairly quick and reliable measure of the inventory. also insurance adjusters, it also acts as a control device. Finally the retail inventory method expedites the physcal inventory count at the end of the year.

IFRS defines market value as replacement cost subject to the constraints of a ceiling and floor. IFRS defines market value as net realizable value without regard to the ceiling and floor constraints required by GAAP.

Abnormal shortages.

With respect to inventories, IFRS defines market as net realizable value.

Significant or unusual inventory financing arrangements. The inventory costing methods employed. All of the above are required disclosures. The composition of the inventory..

The use of the LIFO cost flow assumption. IFRS ONLY PERMITS FIFO AND AVERAGE COSTS

Markups and markdowns apply to goods purchased during the period and not to beginning inventory.