Which Statement Is Correct About Offsetting

question 4

Multiple Choice

Which statement is correct about offsetting?

• A)Offsetting is required under IFRS when the entity is willing and legally able to offset.
• B)Offsetting is required under IFRS when the company intends to settle on a net basis.
• C)Offsetting is generally permitted under IFRS,unless it is specifically prohibited.
• D)Offsetting is required under IFRS when there is a legally enforceable right of offset.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs—material, labor, and overhead—in product cost calculations, excluding fixed costs.

Fixed Manufacturing Overhead

The sum of all production costs that do not change with the level of output, including salaries, rent, and utility expenses of a manufacturing facility.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing overhead costs in the cost of producing goods.

Segmented Income Statement

A segmented income statement breaks down the financial performance of different segments of a business, such as departments or product lines, to analyze each segment's profitability.