Cost for inventory purposes should be determined by the inventory cost flow method best reflecting periodic income.
Question:
Required:
a. Describe the inventory cost flow assumptions of
(1) average-cost,
(2) FIFO,
(3) LIFO.
b. Discuss management's usual reasons for using LIFO in an inflationary economy.
c. When there is evidence the value of inventory, through its disposal in the ordinary course of business, is less than cost, what is the accounting treatment? What concept justifies this treatment? (AICPA Adapted)
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a i The average cost method is based on the assumption that the average costs of the goods in the be...View the full answer
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Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
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