The Three Methods of Inventory Valuation That Are Most Often

question 88

True/False

The three methods of inventory valuation that are most often used in Canada are specific identification, FIFO, and (moving) weighted average.

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Definitions:

Guaranteed Purchase Options

Provisions in insurance or financial contracts allowing the holder to acquire additional coverage or securities at predetermined conditions.

Capital Leases

Leasing agreements classified as purchases of assets for accounting purposes, due to their terms transferring substantial ownership rights to the lessee.

Sales-Type Leases

Leases where the lessor recognizes immediate profit on the transaction, similar to a sale, typically in equipment or vehicle leasing.

Direct-Financing Leases

Direct-Financing Leases are lease agreements where the lessor essentially acts as a financier, purchasing an asset and leasing it to the lessee, without assuming risk of ownership.