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
a portion of the inventory is destroyed.
there is a substantial increase in inventory during the year.
there is no beginning inventory because it is the first year of operation.
none of these
Multiple Choice Question 34
Which method(s) may be used to record a loss due to a price decline in the value of inventory?
a) Cost-of-goods-sold.
b) Sales method.
c) Loss method
Both a and c.
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
include markups and markdowns.
include markdowns but not markups.
ignore both markups and markdowns.
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
LIFO cost flow assumption where appropriate is used by both sets of standards.
fair value valuation of inventories is prohibited by both sets of standards.
costs to include in inventories are similar.
guidelines on ownership of goods are similar.
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?
The interest rate is equal to or greater than the company's cost of capital.
Activities that are necessary to get the asset ready for its intended use are in progress.
Interest cost is being incurred.
Expenditures for the assets have been ma
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
8/8.
8/12.
9/12.
11/12.
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
$64,000
$76,000
$80,000
ultiple Choice Question 35
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest"
refers to
a cost of capital charge for stockholders' equity.
the total interest cost actually incurred.
that portion of total interest cost which would not have been incurred if expenditures for asset
construction had not been made.
that portion of average accumulated expenditures on which no interest cost was incurred.
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.
1 and 2 are correct
1 is correct
All are correct
2 is correct
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
$100,000.
$180,000.
$120,000.
$200,000.