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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Fenimore Manufacturing Company uses the average cost method. It has followed a policy of expensing all its manufacturing cost variances. It is considering a change in its policy that will involve allocating them between cost of goods sold and inventory. Fenimore’s president has asked you which of these alternative policies is consistent with GAAP.

Directions

Research the related generally accepted accounting principles and prepare a short memo to the president. Cite your references and applicable paragraph numbers.

To determine

Draft a memo with a research on the GAAP along with the references.

Explanation

Memo

From

AB

To

The President,

Company FM.

April 16, 2019

Sub: GAAP for inventory

Dear Sir\Mam,

The valuation of the inventory plays a vital role for every company. This must however to be compliant with GAAP, the FASB ASC 330-10-30, needs to be adhered. In this principle, the inventory is valued at a standard cost which are frequently altered to approximate the market costs. Thus, the balance sheet prepared shall result in a near market inventory value...

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