How are the floor and ceiling limits calculated as per the lower of cost or market (LCM) method under U.S. GAAP? Floor limit is the difference between the Estimated Sale price and the normal profit margin while ceiling limit equals to the Net Realizable value (NRV). Floor limit is the difference between the Net Realizable value (NRV) and estimated distribution cost while ceiling limit equals to Estimated Sale price. Floor limit is the difference between Estimated Sale price and distribution cost while ceiling limit equals to the difference between the Net Realizable value (NRV) and the normal profit margin. Floor limit is the difference between the Net Realizable value (NRV) and the normal profit margin while ceiling limit equals to the Net Realizable value (NRV)

How are the floor and ceiling limits calculated as per the lower of cost or market (LCM) method under U.S. GAAP? Floor limit is the difference between the Estimated Sale price and the normal profit margin while ceiling limit equals to the Net Realizable value (NRV). Floor limit is the difference between the Net Realizable value (NRV) and estimated distribution cost while ceiling limit equals to Estimated Sale price. Floor limit is the difference between Estimated Sale price and distribution cost while ceiling limit equals to the difference between the Net Realizable value (NRV) and the normal profit margin. Floor limit is the difference between the Net Realizable value (NRV) and the normal profit margin while ceiling limit equals to the Net Realizable value (NRV)

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 7QE

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When applying lower of cost or net realizable value under the FIFO, average cost, or specific identification method, market value a.is defined as the selling price. b.should not exceed the net realizable value plus an allowance for a normal profit margin. c.should not exceed the net realizable value less an allowance for a normal profit margin. d.is defined as the net realizable value.
During periods of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why?
Is the cost of sales under weighted average always greater than the cost of sales in FIFO?
Please provide some explanation for the below question: 1. When applying lower of cost or market, market value A. is defined as the selling price B. should not exceed the net realizable value C. should not exceed the net realizable value less an allowance for a normal profit margin D. should not exceed the net realizable value plus an allowance for a normal profit margin
Which of the following equations is correct for determining the required sales in units to generate a targeted amount of pre-tax income (πB) under the equation method (where Q = sales in units, F = total fixed costs, πB = pre-tax profit, v = variable cost per unit, and p = selling price per unit)?
In a hyperinflationary economy, amounts not expressed to the measuring unit current at the end of reporting period are restated by applying: a. General price index b. Specific price index c. Both general price index and specific price index d. Either general price index or specific price index
Contrast the income statement effect of LIFO versus FIFO(on Cost of Goods Sold and Gross Profit) when ( a ) costsare rising and ( b ) costs are falling.
What is the interpretation of a price-to-book ratio = 1?Select one:a. The selling price of the firms’ products equal to the market value of the productsb. The Market thinks the book value of the firm is greater than the market valuec. None of the given choicesd. The market is valuing the firm at its book value
Is it good, fair or bad if price earning ratio is higher than industry average in terms of cross-sectional evaluation?
Which of the following transfer price approaches is used when the transfer price is set at the amount sold to outside buyers? a. variable price b. cost price c. negotiated price d. market price
Which method would produce the same unit cost for Inventory and Cost of Good Sold in periods of rising prices? Select one: a. Weighted Average b. FIFO c. LIFO
1. Which of the following is TRUE about contribution margin? Select one: A. The amount remaining after cost of goods sold has been deducted from sales revenues. B. The amount remaining fixed costs have been deducted from sales revenue. C. The amount remaining after fixed costs have been deducted from variable costs. D. The amount remaining after variable costs have been deducted from sales revenue. 2. Which of the following financial statements reports information as of a specific date? Select one: A. Statement of Changes in Equity. B. Statement of Profit or Loss and other Comprehensive Income. C. Statement of Cash Flows. D. Statement of Financial Position. 3. The following are objectives of budgeting EXCEPT: Select one: A. Compare organisational actual achievement with planned goals. B. Ensuring departments within an organisation operate as a team. C. Establishing and communicating organisational goals. D. Developing appropriate high technology information system for an…