Excellent Corp

question 35

Multiple Choice

Excellent Corp., a foreign company, is listed in the U.S.stock exchange.It follows Local GAAP.The income statement of Excellent Corp.reported £165 as indirect costs related to inventory.The Local GAAP treats these as operating expense.When reconciling Excellent Corp's financial statements to U.S.GAAP, how should be these indirect costs treated?

• A)These should be treated as operating expenses in the period in which they are incurred.
• B)These costs are treated as product costs and are expensed as cost of goods sold when inventory is sold.
• C)The entire amount will be shown on the liability side of the balance sheet.
• D)This amount should be adjusted through the revaluation of inventories.

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