INTACC - CHAPTER 12 Flashcards
Net realizable value is
a. Current replacement cost
b. Estimated selling price
c. Expected selling price less expected cost to complete and cost of disposal
d. Estimated selling price less estimated cost to complete and cost of disposal
d. Estimated selling price less estimated cost to complete and cost of disposal
Inventories are usually written down to net realizable value
a. Item by item
b. By classification
c. By total
d. By segment
a. Item by item
LCNRV is best described as the
a. Reporting of a loss when there is a decrease in the future utility below the original cost.
b. Method of determining cost of goods sold.
c. Assumption to determine inventory flow.
d. Change in inventory value to net realizable value.
a. Reporting of a loss when there is a decrease in the future utility below the original cost.
LCNRV of inventory
a. Is always either the net realizable value or cost.
b. Must be equal to net realizable vlaue.
c. May sometimes be less than net realizable value.
d. Must be equal to estimated selling price less cost to complete and cost of disposal.
a. Is always either the net realizable value or cost.
Which statement is true regarding inventory writedown and reversal of writedown?
a. Reversal of inventory writedown is prohibited.
b. Separate reporting of reversal of inventory write down is required.
c. An entity is required to record an inventory writedown in a separate loss account.
d. All of the choices are correct.
b. Separate reporting of reversal of inventory write down is required.
How should trade discounts be dealt with when valuing inventories at the lower of cost and net realizable value?
a. Added to cost
b. Ignored
c. Deducted in arriving at NRV
d. Deducted in arriving at cost
d. Deducted in arriving at cost
How should prompt payment discount be dealt with when valuing inventories at LCNRV?
a. Added to cost
b. Ignored
c. Deducted in arriving at NRV
d. Deducted from cost
b. Ignored
How should sales staff commission be dealt with when valuing inventories at LCNRV?
a. Added to cost
b. Ignored
c. Deducted in arriving at NRV
d. Deducted from cost
c. Deducted in arriving at NRV
How should import duties be dealt with when valuing inventories at LCNRV?
a. Added to cost
b. Ignored
c. Deducted in arriving at NRV
d. Deducted from cost
a. Added to cost
Net realizable value is defined as
a. Current replacement cost
b. Estimated selling price less estimated cost to complete and estimated cost of disposal
c. Expected selling price less expected cost to complete and expected cost of disposal
d. Fair value less cost of disposal
b. Estimated selling price less estimated cost to complete and estimated cost of disposal
Inventories shall be measured at
a. Cost
b. Net realizable value
c. Lower of cost and net realizable value
d. Lower of cost and fair value
c. Lower of cost and net realizable value
