The Cost of Transferred-In Units Is Accounted for By

question 96

Multiple Choice

The cost of transferred-in units is accounted for by:

• A) Ignoring it
• B) Adding it to beginning WIP and work performed this period as an additional cost with a separate category
• C) Adding it to direct materials and allocating it with the direct materials
• D) Adding it to conversion costs and allocating it with conversion costs

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Definitions:

Inventories

Goods or materials that a business holds for the purpose of sale or production.

Subsidiary Entity

A company that is controlled by another company, known as the parent company, through ownership of more than half of its voting stock or through control of its operations.

Parent Entity

A corporation that owns enough voting stock in another corporation to control management and operations by influencing or electing its board of directors.

Non-depreciable Asset

An asset that is not subject to depreciation due to its indefinite useful life or that it maintains its value over time, such as land.