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ay Company had January 1 inventory of $120,000 when it adopted dollar-value LIFO. During the year, purchases were $600,000 and sales were $1,200,000. December 31 inventory at year-end prices was $151,800, and the price index was 110. What is Hay Company’s ending inventory? $138,000 $151,800 $132,000 $139,800 |
The gross profit method of inventory valuation is invalid when
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a portion of the inventory is destroyed. |
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there is a substantial increase in inventory during the year. |
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there is no beginning inventory because it is the first year of operation. |
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none of these |
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Multiple Choice Question 34 |
Which method(s) may be used to record a loss due to a price decline in the value of inventory?
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a) Cost-of-goods-sold. |
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b) Sales method. |
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c) Loss method |
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Both a and c. |
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ultiple Choice Question 55 |
To produce an inventory valuation which approximates the lower of cost or market using the conventional retail
inventory method, the computation of the ratio of cost to retail should
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include markups and markdowns. |
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include markdowns but not markups. |
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ignore both markups and markdowns. |
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include markups but not markdowns. |
All of the following are key similarities between U.S. GAAP and IFRS with respect to accounting for inventories except
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LIFO cost flow assumption where appropriate is used by both sets of standards. |
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fair value valuation of inventories is prohibited by both sets of standards. |
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costs to include in inventories are similar. |
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guidelines on ownership of goods are similar. |
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ultiple Choice Question 41 |
Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset?
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The interest rate is equal to or greater than the company’s cost of capital. |
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Activities that are necessary to get the asset ready for its intended use are in progress. |
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Interest cost is being incurred. |
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Expenditures for the assets have been ma |
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Multiple Choice Question 38 |
Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is
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8/8. |
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8/12. |
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9/12. |
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11/12. |
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Multiple Choice Question 94 |
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $48,000 and a fair value of
$60,000
. The asset given up by Armstrong Co. has a book value of
$80,000
and a fair value of
$76,000
. Boot of $16,000 is received by Armstrong Co.
What amount should Glen Inc. record for the asset received?
| $60,000 |
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$64,000 |
| $76,000 |
| $80,000 |
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ultiple Choice Question 35 |
When computing the amount of interest cost to be capitalized, the concept of “avoidable interest” refers to
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a cost of capital charge for stockholders’ equity. |
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the total interest cost actually incurred. |
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that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made. |
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that portion of average accumulated expenditures on which no interest cost was incurred. |
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IFRS Multiple Choice Question 16 |
IFRS permits companies to carry assets at historical cost or use a revaluation model for fixed assets. According to IAS 16, if revaluation is used:
1. it must be applied to all assets in a class of assets.
2. assets must be revalued on an annual basis.
3. assets must be depreciated on the straight-line basis.
4. salvage values must be zero.
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1 and 2 are correct |
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1 is correct |
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All are correct |
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2 is correct |
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Multiple Choice Question 119 |
On April 1, 2011, Verlin Co. purchased new machinery for $300,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years’-digits method. The accumulated depreciation on this machinery at March 31, 2013, should be
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$100,000. |
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$180,000. |
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$120,000. |
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$200,000. |
