Session 11 - Handout

Session 11 - Handout - Fall 2010 Professor Keating...

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Unformatted text preview: Fall 2010 Professor Keating Session #11 AC 611: Financial Accounting Problems I © Elizabeth K. Keating, 2010 Session #11 Lower of Cost or Market Pg. 2 AC 611: Financial Accounting Problems I © Elizabeth K. Keating, 2010 Session #11 Pg. 3 Produce Example AC 611: Financial Accounting Problems I © Elizabeth K. Keating, 2010 Session #11 Pg. 4 Recording Market Value AC 611: Financial Accounting Problems I ! Both methods are GAAP. ! Allowance method is preferable ! Shows decline in market value separate from COGS in I/S ! Allowance should be reduced as goods sold ! Often, firms record gains when valuation allowance is too high © Elizabeth K. Keating, 2010 Session #11 Pg. 5 Valuation Bases ! Net Realizable Value (even if cost is lower) is allowed if both: ! Controlled market with prices applicable to all quantities ! No significant disposal costs Example: (Rare metals, meat) ! Relative Sales Value iza AC 611: Financial Accounting Problems I © Elizabeth K. Keating, 2010 Session #11 Pg. 6 Valuation Bases (cont.)Valuation Bases (cont....
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This note was uploaded on 03/02/2011 for the course AC 611 taught by Professor Keating during the Spring '11 term at Bentley.

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Session 11 - Handout - Fall 2010 Professor Keating...

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