Cost Accounting A Managerial Emphasis Study Set 1
Quiz 15: Cost Allocation: Joint Products and Byproducts
Byproduct Revenues Appear in the Income Statement as a Cost
Byproduct revenues appear in the income statement as a cost increase to the main product and as a separate item of expense.
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Recognition of byproducts in the financial statements at the time of sale usually occurs when the dollar amounts of the byproducts are immaterial.
A sound reason for reporting revenue from byproducts as an income statement item at the time of sale is to lessen the chance of managers managing reported earnings.
A byproduct is one or more products of a joint production process that have low total sales value compared to the total sales value of the main product or joint products.
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