Choose true options with short explanation. tagging. cost account Which statement is true concerning the LCM (lower cost or market)application to inventory?a. Failure to apply may violate the cost principleb. It can be applied at the unit or sub-category levelsc. Cost of Goods Sold may need to be adjustedd. All of the above

The correct answer is:d. All of the above Explanation of Each Optiona. Failure to apply may violate…

Answered: Which statement is true concerning the…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 9QE

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Considering the following information, and applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a. LIFO. b. FIFO. c. Average cost. d. Specific identification
The application of the lower of cost or market rule to inventory valuation is an example of a. the revenue realization principle b. the going concern assumption c. special industry practices d. conservatism
Which of the following should not be taken into account when determining the cost of inventory? A. Storage cost of part finished goodsB. Trade discount C. Import duty on shipping of inventory inward D. Freight cost on purchase
Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of inventory might be lower than its cost?
Explain what is meant by the cost rule or net realizable value, whichever is less, and how it is applied to inventory, and whether it contradicts accounting principles I need explain and write there please.
Which one of the following sets of inventory cost flow assumptions is not susceptible to profit manipulation by management? a. FIFO and specific identification b. LIFO and average cost c. FIFO and average cost d. LIFO and specific identification
Which of the following should not be taken into account when determining the cost of inventory? a. storage costs of part- finished goodsb. trade discountsc. recoverable purchase taxesd. import duties on shipping of inventory
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
Briefly explain the usefulness of the inventory figure resulting from the application of lower of cost and net realizable value
The most common approach to implementing the lower of cost or market rule for inventory valuation is to apply it a. separately to each item of inventory b. to each major category inventory c. to the total inventory d. in a combination of the above methods
Which inventory costing method is prohibited under IFRS? a) FIFO b) LIFO c) Weighted average d) Specific identification

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Which statement is true concerning the LCM (lower cost or market) application to inventory? a. Failure to apply may violate the cost principle b. It can be applied at the unit or sub-category levels c. Cost of Goods Sold may need to be adjusted d. All of the above