Reading 28 inventories questions and answers

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Reading 28 inventories questions and answers

Reading 28: InventoriesQuestion #1 of 89Under U.S. GAAP, the LIFO reserve is a required financial statement disdosure:X A) for firms that use either t

Reading 28 inventories questions and answers the LIFO or FIFO inventory cost methods.X B) for all firms except those that use the specific identification cost method y C) only for firms that use

the LIFO inventory cost method.ExplanationOnly firms that use the LIFO inventory cost method are required to disclose a LIFO reserve.ReferencesQuestio Reading 28 inventories questions and answers

n From: Session 8 > Reading 28 > LOS eRelated Material:• Key Concepts by LOSQuestion ID: 598959Question #2 of 89Question ID: 414473Using the lower of

Reading 28 inventories questions and answers

cost or market principle under U.S GAAP, if the market value of inventory falls below its historical cost, the minimum value at which the inventory ca

Reading 28: InventoriesQuestion #1 of 89Under U.S. GAAP, the LIFO reserve is a required financial statement disdosure:X A) for firms that use either t

Reading 28 inventories questions and answers ing costs minus normal profit margin.ExplanationWhen inventory is written down to market, the replacement cost of the inventory is its market value, b

ut the "market value" must fall between net realizable value (NRV) and NRV less normal profit margin. NRV is the market price of the inventory less se Reading 28 inventories questions and answers

lling costs. Therefore the minimum value is the market price minus selling costs minus normal profit margin.ReferencesQuestion From: Session 8 > Readi

Reading 28 inventories questions and answers

ng 28 > LOS gRelated Material:• Key Concepts by LOSQuestion #3 of 89Qucstkxi ID: 683853Given the following inventory information about the Buckner Com

Reading 28: InventoriesQuestion #1 of 89Under U.S. GAAP, the LIFO reserve is a required financial statement disdosure:X A) for firms that use either t

Reading 28 inventories questions and answers goods sold (COGS) is $15,000.•After-tax income IS S1.600.How much higher would the firm’s retained earnings be on a FIFO basis if the firm's tax rate

is 40%?X A) $1.800.y B) $1.500.X C) $2,100.ExplanationAdjustment to retained earnings = LIFO reserve (1 - t) = $2.500(1 - 0.4) = S1.500. Reading 28 inventories questions and answers

Reading 28: InventoriesQuestion #1 of 89Under U.S. GAAP, the LIFO reserve is a required financial statement disdosure:X A) for firms that use either t