A refinery buys 20 million barrels of crude oil at a market price of $25 per barrel on 17th August 20X1. Having processed the oil, the refinery sells its final products in October 20X1 for an average price of $43 per barrel, when the average market price of crude oil is $30 per barrel. Which of the following statements about current replacement cost accounting is/are correct: (i) Cost of sales is $500 million. (ii) The capital maintenance adjustment is $130 million. (iii) Replacement cost profit of $360 million is made on the sale. Select one: a. (i) only b. (ii) only c. No statement is correct d. (i) and (iii) e. (i) and (ii) ○ f. (iii) only g. (ii) and (iii)
A refinery buys 20 million barrels of crude oil at a market price of $25 per barrel on 17th August 20X1. Having processed the oil, the refinery sells its final products in October 20X1 for an average price of $43 per barrel, when the average market price of crude oil is $30 per barrel. Which of the following statements about current replacement cost accounting is/are correct: (i) Cost of sales is $500 million. (ii) The capital maintenance adjustment is $130 million. (iii) Replacement cost profit of $360 million is made on the sale. Select one: a. (i) only b. (ii) only c. No statement is correct d. (i) and (iii) e. (i) and (ii) ○ f. (iii) only g. (ii) and (iii)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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