Which of the following is/are true?
A)Acquisition cost for a merchandising firm includes the costs incurred to purchase and transport the inventory prior to sale.
B)Acquisition cost for a manufacturing firm includes the direct material, direct labor, and manufacturing overhead cost to produce the inventory.
C)If the market values of inventory items decline below acquisition cost prior to sale, firms must reduce their balance sheet carrying values using the lower of cost or market method.
D)U.S.GAAP uses a combination of replacement cost and net realizable values to measure market value.
E)all of the above

Question

Quizplus · Accepted Answer

All the options (A)-(D) are true. Acquisition costs for a merchandising firm includes the costs incurred to purchase and transport the inventory prior to sale. For a manufacturing firm, the acquisition cost includes the direct material, direct labor, and manufacturing overhead cost to produce the inventory. If the market values of inventory items decline below acquisition cost prior to sale, firms must reduce their balance sheet carrying values using the lower of cost or market method. U.S. GAAP uses a combination of replacement cost and net realizable values to measure market value. Therefore, option (E) is the correct choice.

Which of the Following Is/are True