Day 23 - 57% FAIL - Inventory

Question 1

True or False: Interest can be capitalized for special order goods held for sale to customers

Answer 1

True - Can capitalize interest on SPECIAL order goods

You CANNOT capitalize interest on ORDINARY Inventory production

MCQ-01988

Question 2

ABC owns 15% of Tesla but is well represented on the board of directors. What method would be used to report this investment on ABC books?

Answer 2

Equity method bc ABC can exercise significant influence

MCQ-07503

Question 3

ABC for a bank loan to construct machinery for it’s own use and machinery held for sale. How much interest expense is reported on the income Stmt?

Answer 3

Interest costs during construction for it’s own use should be capitalized

All interest costs for held for sale should be expensed

MCQ-00140

Question 4

How to test for an impairment loss?

Answer 4

1. Compare CV to undiscounted future cash flows *(if less than CV = impairment loss needs to be recognized)
2. CV less FV of assets = impairment loss

MCQ-07230

Question 5

Lower of Cost and Net Realizable Value is used for all inventory not costed using ____?

Answer 5

LIFO

MCQ-06053

Question 6

An asset has a 15% salvage value, what depreciation method will A/D equal the original cost of the asset?

Answer 6

None, FA cannot depreciate below their salvage value

Only if asset has no salvage value $0 could A/D equal original cost

MCQ-05936

Question 7

What costs are included in inventory?

Answer 7

1. Inventory cost
2. Freight-in
3. Costs to make inventory sellable
4. Insurance costs during transportation

MCQ-05912

Question 8

Lower of Cost or Market is used is used when inventory is costed using ____?

Answer 8

LIFO

MCQ-06053

Question 9

Under Lower of cost or market, the “Market” is the ____ value of the ____?

Answer 9

Market = the MIDDLE VALUE of the Replacement Cost, Market Ceiling, and the Market Floor

MCQ-08591