(3)

Question 1

Dollar-Value LIFO method definition

Answer 1

The dollar-value LIFO method adjusts inventory retail prices and ending inventory cost for price-level changes.

Question 2

When to depart from cost when valuing inventory

Answer 2

When the utility of goods is no longer as great as the cost.

Question 3

Fixed asset impairment test rules.

Answer 3

Fixed assets are first tested for impartment. If the sum of the undiscounted future CF’s is less than the carrying amount, an imparment loss needs to be recognized.

Question 4

After impairment loss is recognized, the adjusted carrying value of the intangible asset shall be its new accounting basis. The subsequent reversal of a previously recognized impariment loss under GAAP is:

Answer 4

PROHIBITED, unless the asset is held for sale.

Question 5

Inventory method that is measured through estimate in changes in price levels (known as price index)

Answer 5

Dollar value LIFO

Question 6

Price index formula

Answer 6

Ending inventory at current year cost / ending inventory at base year cost