Which of the following statements related to the application of the lower of cost and net realizable value is true? * A. If the replacement cost of a raw material is less than its cost, the said raw material shall always be presented at its replacement cost B. If the net realizable value of an inventory is lower than its cost, a loss on inventory write-down should be recognized C. The gain on reversal of inventory write-down should not exceed the balance of allowance, and such gain can be netted against cost of goods sold D. The net realizable value of a work-in-process inventory is its selling price, less the normal profit margin and estimated cost to complete E. None of the above

Q: Both IFRS and U.S. GAAP apply the lower of cost or market method for reporting inventory values. If…

A: LCM Method: Termed as Lower of Cost or Market, this method explains that the inventory of a company…

Q: AD, Inc. uses the LIFO-lower of cost or market method to value inventory. If the inventory value is…

A: For financial reporting purposes, will value the inventory in accounting at lower prices or on the…

Q: which of the following will not be deducted to compute the consolidated cost of goods sold? A.…

A: Consolidated financial statements means financial statements of overall group where company have one…

Q: Which of the following statements about the use of the FIFO assumption is NOT true?   a.   The…

A: Solution: "The FIFO assumption produces inventory asset values that are based on older purchase…

Q: One of the accepted methods of accounting for by-product is to recognize the value of the by-product…

A: By product is the product that is manufactured with the primary product but later on, it is…

Q: When net realizable value is lower than cost, and the loss method applying the…

A: As per Accounting Standards on Inventory valuation, each item of inventory is calculated at cost or…

Q: IFRS and GAAP are similar for all of the following inventory accounting standards except IFRS…

A: IFRS allows the inclusion of overhead in inventory. In IFRS the use of LIFO cost flow assumption is…

Q: Identify the correct statement from the following if, cost of inventory is greater than its net…

A: Net realizable value seems to be an essential indicator being used in accounting reporting for…

Q: Which of the three methods of inventory costing -FIFO, LIFO, or weighted average cost - will in…

A: FIFO - Inventory purchased first is assumed to be sold first. LIFO - Inventory recently purchased is…

Q: Which of the following is not an inventory method/cost flow assumption? O a. First-in, first-out O…

A: 5 methods for inventory cost are below: The retail inventory method. The specific identification…

Q: Lower of cost and net realizable value a. results in the lowest valuation if applied to the total…

A: It is preferable to value the inventory at lower of cost or net realizable value (LCNRV) in…

Q: If the net realizable of an entity's inventories is less than its cost, the entry to adjust the…

A: Introduction: Under the lower of cost or net realizable value (LCNRV) method, if net selling price…

Q: Which of the following is not a disadvantage of the LIFO inventory cost flow assumption? a. The…

A: LIFO is the Last in first out method of inventory which says that inventory purchased last should be…

Q: Under the lower of cost or market inventory valuation rule, market value of inventory is defined as:…

A: Market value is the price of an item/product prevailing in the market on the given date.

Q: Which one of the following is not a disadvantage of the specific identification method of inventory…

A: Under specific identification methods of inventory, specific inventory movement is measured. So it…

Q: In which of the following scenarios does the basic Economic Order Quantity model can be applied? * O…

A: Lets understand the basics. Economic order quantity(EOQ) is a quantity at which ordering cost and…

Q: The cost of purchase of inventory does not include: A. Freight handling and other cost directly…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: The major criticism of the lower of cost or market rule for valuation of inventory is that

A:

Q: Do you agree with the following statements? Express your opinion on each statement.

A: 1: This statement is correct  This can be explained with the help of example: Suppose closing stock…

Q: Do you agree with the following statements? Express your opinion on each statement. An inventory…

A: 1) This statement is correct  This can be explain with the help of example: Suppose closing stock is…

Q: 2- Which of the following is a product cost as it relates to inventory? a. Selling costs. b.…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Which statements below are true? 1. LCM and LCNRV may be applied by individual products, by…

A:

Q: Which of the following statement is not valid as it applies to inventory costing method?  A) If…

A: The correct answer is Option (d)

Q: Which one of the following statements is true? a. Under conditions of rising prices, the LIFO…

A: Step 1    Last in, first-out (LIFO) is inventory method in which the costs of the most recent…

Q: View Policies Current Attempt in Progress Which costing method cannot be used to determine the cost…

A: As per accounting standard, cost of inventory should be calculated as lower of cost or net…

Q: Which U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is…

A: Net realizable value: Net realizable value is the net amount of receivables which a business expects…

Q: Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value…

A: there is difference in the requirement of and recording of inventory as per ifrs and US GAAP . gaap…

Q: If beginning inventory is understated, cost of goods sold would also be understated. True False

A: The cost of goods sold can be calculated by adding up net purchase and deducting ending inventory…

Q: Which of the following would be relevant in the decision to sell or throw out obsolete inventory?…

A: Inventory: It refers to the items held by an organization which were in various forms like raw…

Q: In some instances, accounting principles require a departure from valuing inventories at cost alone.…

A: Lower-of-cost-or-market value: The lower-of-cost-or-market value is a method which requires the…

Q: Which of the following is a similarity between GAAP and IFRS with respect to accounting for…

A: Inventory valuation: Ending inventory of every company should be valued at the end of each year…

Q: Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending…

A: LIFO method last in first out so LIFO method take last cost of product into account so do not older…

Q: Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)?…

A: Inventory means the stock of goods in which the businessmen deals. Every company wants to maintain…

Q: Discuss the primary differences between U.S. GAAP and IFRS with respect to the lower of cost or net…

A:

Q: Allowance Method in accounting for inventory write-down

A: Statement I is correct because Allowance method is required to be followed in accounting for…

Q: If a misstatement of inventory occurs, the net income for-----periods will be misstated

A: The ending inventory affects the income statement and after that ending inventory becomes the…

Q: he amount of any write down of inventory to net realizable value and all losses of inventory shall…

A: The international accounting standard 2 (IAS 2) contains the rules related to inventories.

Q: Which of the following is true of abnormal spoilage? a. It is considered to be part of production.…

A: Spoilage refers to materials or components that have been damaged, which are beyond the capacity of…

Q: In a period of falling prices, the use of which inventory cost flow method would typically result in…

A: The inventory valuation is done at the end of the accounting period. Different techniques are…

Q: Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO…

A: In FIFO method  the opening  and earliest goods will be sold first.

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.