Which One of the Following Items Is Most Likely a Derived-Demand

question 375

Multiple Choice

Which one of the following items is most likely a derived-demand inventory item?

• A) Dog food ready to be bagged and sold.
• B) Clothes on a rack in a retail store.
• C) Cars sitting in a lot ready to be shipped by the auto manufacturer to auto dealers.
• D) Auto glass held in inventory by an auto manufacturer.
• E) Corn harvested by a corn farmer.

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Definitions:

Finance Lease

A lease agreement that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.

AASB 16

An accounting standard issued by the Australian Accounting Standards Board specifying the principles for recognition, measurement, presentation, and disclosure of leases.

IFRS 16

The International Financial Reporting Standard issued by the IASB which specifies how an IFRS reporter will recognize, measure, present, and disclose leases.

AASB 16

An accounting standard issued by the Australian Accounting Standards Board that specifies the principles for the recognition, measurement, presentation, and disclosure of leases.