When comparing the lower of cost to marketthe appropriate market value is determined before comparing it to the costthe purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains Othe purpose of the floor is to prevent an excessive gain from being recognized in the futurethe process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross marginO000

When comparing the lower of cost to market the appropriate market value is determined before comparing it to the cost the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains the purpose of the floor is to prevent an excessive gain from being recognized in the future the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin

When comparing the lower of cost to market the appropriate market value is determined before comparing it to the cost the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains the purpose of the floor is to prevent an excessive gain from being recognized in the future the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please provide some explanation for the below question: 1. When applying lower of cost or market, market value A. is defined as the selling price B. should not exceed the net realizable value C. should not exceed the net realizable value less an allowance for a normal profit margin D. should not exceed the net realizable value plus an allowance for a normal profit margin
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Which method results in a more realistic amount for income because it matches the most current costs against revenue? a.FIFO b.Weighted average cost c.Specific identification d.LIFO
Which of the following performance measures will increase if inventory decreases and all else remains the same? Return on Residual Investment Income A) B) Yes Yes No Yes Yes No D) No No Multiple Choice Choice C Choice D Choice A
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