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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Transcribed Image Text: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)
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