This preview shows page 1 - 3 out of 54 pages.

CHAPTER 9 INVENTORIES: ADDITIONAL VALUATION ISSUES IFRS questions are available at the end of this chapter. TRUE-FALSE —Conceptual Answer No. Description T 1. When to use lower-of-cost-or-market. F 2. Lower-of-cost-or-market and conservatism. F 3. Purpose of the “floor” in LCM. T 4. Lower-of-cost-or-market and consistency. F 5. Reporting inventory at net realizable value. T 6. Valuing inventory at net realizable value. T 7. Valuation using relative sales value. F 8. Definition of a basket purchase. F 9. Recording purchase commitments. T 10. Loss on purchase commitments. F 11. Recording noncancelable purchase contract. T 12. Gross profit method. F 13. Gross profit percentage. T 14. Disadvantage of gross profit method. F 15. Conventional retail method. F 16. Definition of markup. T 17. Accounting for abnormal shortages. F 18. Computing inventory turnover ratio. T 19. Average days to sell inventory. T 20 LIFO retail method. MULTIPLE CHOICE —Conceptual Answer No. Description d 21. Knowledge of lower-of-cost-or-market valuations. d 22. Appropriate use of LCM valuation. c 23. Definition of "market" under LCM. b 24. Definition of "ceiling." a 25. Definition of "designated market value." c 26. Application of lower-of-cost-or-market valuation. d 27. Effect of inventory write-down. d S 28. Recording inventory loss under direct method. a 29. Lower-of-cost-or-market description. b 30. Definition of "floor". d 31. Rationale of the "ceiling". c 32. Reason inventories are stated at LCM. a 33. Acceptable approaches in applying LCM. d 34. Methods used to record inventory loss. a 35. Reason for reporting inventory at sales price. c S 36. Recording inventory at net realizable value.
Image of page 1

Subscribe to view the full document.