Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value subsequently recovers, under which accounting standards may Rustic revalue the inventory upward and recognize a gain? A) Neither IFRS nor U.S. GAAP allows a recovery in inventory value to be recognized as a gain. B) IFRS allows a recovery in inventory value to be recognized as a gain, but U.S. GAAP does not. c) U.S. GAAP allows a recovery in inventory value to be recognized as a gain, but IFRS does not.

Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value subsequently recovers, under which accounting standards may Rustic revalue the inventory upward and recognize a gain? A) Neither IFRS nor U.S. GAAP allows a recovery in inventory value to be recognized as a gain. B) IFRS allows a recovery in inventory value to be recognized as a gain, but U.S. GAAP does not. c) U.S. GAAP allows a recovery in inventory value to be recognized as a gain, but IFRS does not.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: e sale of inventory items by a parent company to an affiliated company a. enters the consolidated…

A: The parents company normally sends goods to affiliated company and but both sales and profit are…

Q: When an exchange of inventory items between an enterprise and another entity is undertaken to serve…

A: Non-monetary exchange is governed by Accounting for Non-monetary Transactions

Q: 1.If Company Abee holds consigned goods from Company XyXy, which statement is true? Group of answer…

A: Consignment is the type of business in which one person (consignor) sent goods to the other person…

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

Q: does not result in the recognition of revenue. O The sale of inventory O Rendering a service O…

A: A crucial accounting concept that establishes when a business should record revenue in its financial…

Q: What method does the company use to value its inventory? What other alternativesare available under…

A: IFRS: International Financial Reporting Standard is abbreviated as IFRS. The IFRS is set up to bring…

Q: Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable…

Q: When a company changes its inventory method to LIFO, an exception is made for the way accounting…

A: Explain the difference in the accounting treatment of a change to the LIFO inventory method from…

Q: What is the potential impact of differences in areas such as inventory valuation of unilever united…

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: When a component of a company's operations is classified as held for sale at the end of an…

A: When a component of a company's operation is classified as held for sale at the end of an accounting…

Q: What is a good response to? Unrealized intercompany inventory profits from a prior period are…

A: Hi Student:Since this is a commentary questions, allow me to provide, Strong key points in the…

Q: In reference to the determination of goodwill impairment, which of the following statements is…

A: Goodwill impairment is an accounting charge that companies record when goodwill's carrying value on…

Concept explainers

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.

Question

Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value subsequently recovers,
under which accounting standards may Rustic revalue the inventory upward and recognize a gain?
A) Neither IFRS nor U.S. GAAP allows a recovery in inventory value to be recognized as
a gain.
B) IFRS allows a recovery in inventory value to be recognized as a gain, but U.S. GAAP
does not.
c) U.S. GAAP allows a recovery in inventory value to be recognized as a gain, but IFRS
does not.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

All of the following statements regarding asset impairments are true EXCEPT which one? O After recording the impairment loss, the reduced carrying amount of the asset held for use becomes its new cost basis O An impaired asset held for disposal may not be written up O An impairment loss for an asset held for use may not be restored. An impaired asset held for disposal is treated like inventory, and therefore should be reported at the lower-of-cost or net-reaalizable value.
Discuss the primary difference between U.S. GAAP and IFRS with respect to determining the cost of inventory.
One of the significant remaining differences between U.S. GAAP and IFRS is the treatment of inventory. Which of the following accurately states the reason for this significant difference? O IFRS does not allow LIFO. O IFRS does allow Dollar Value LIFO. O IFRS does allow Weighted Average. O IFRS does not allow FIFO.
Discuss the primary differences between U.S. GAAP and IFRS with respect to the lower of cost or net realizable value rule for valuing inventory.
Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost. True or False True False
When is ending inventory written down below its acquisition cost on the balance sheet? Select one: A. When units are damaged, physically deteriorated, or obsolete B. When the inventory's replacement cost exceeds its acquisition cost C. When the inventory's replacement cost is below its acquisition cost D. Both A and C
The reason goodwill is sometimes referred to as a master valuation account is because a. it represents the purchase price of a business that is about to be sold.b. it is the difference between the fair market value of the net tangible and identifiableintangible assets as compared with the purchase price of the acquired business.c. the value of a business is computed without consideration of goodwill and thengoodwill is added to arrive at a master valuation.d. it is the only account in the financial statements that is based on value, all otheraccounts are recorded at an amount other than their value.
Which of the following statements is true of tax rules for applying the lower-of-cost-or- net realizable value method to inventory? Tax rules do not address the choice of methods in applying the lower-of-cost-or- net realizable value method to inventory. Tax rules require the use of the total inventory basis. Tax rules require the use of an individual-item basis if it practicable. O Tax rules require the use of the method which minimizes the recorded loss.
(a) What is the underlying principle in eliminating intercompany inventory transactions? (b) How do intercompany inventory transactions effect NCI (non-controlling interest)? Note the effect for both downstream and upstream sales.