How Does the Net Realizable Value Method Allocate Joint Costs

question 131

Multiple Choice

How does the net realizable value method allocate joint costs?

• A) allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point
• B) allocates joint costs to joint products on the basis of the relative sales value at the split-off point
• C) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
• D) allocates joint costs to joint products on the basis of relative NRV

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Definitions:

Bearer Form

A method of issuing securities whereby the certificate does not record the owner's name, making possession of the physical certificate equivalent to ownership of the security.

Income Taxes

Taxes imposed by the government directly on income, both earned (salaries, wages, commissions) and unearned (interest, dividends).

Indirect Quote

A foreign exchange rate quotation that specifies the foreign currency amount that can be purchased with one unit of the domestic currency.

Country B's Currency

The legal tender or monetary system used in a hypothetical Country B, which can be exchanged for goods and services or traded for other currencies.