Which of the following is not 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)If the market values of inventories increase during a period, IFRS permits firms to recognize the unrealized gain to the extent that the firm had previously recognized an unrealized loss on those inventory items.
E)If the market values of inventories increase during a period, U.S.GAAP permits firms to recognize the unrealized gain to the extent that the firm had previously recognized an unrealized loss on those inventory items.

Question

Quizplus · Accepted Answer

This statement is not true under U.S.GAAP. Under U.S.GAAP, unrealized gains cannot be recognized until the inventory has been sold. The correct statement is that IFRS permits firms to recognize the unrealized gain to the extent that the firm had previously recognized an unrealized loss on those inventory items.

Which of the Following Is Not True