Which Statement Is Correct About Cost Allocation Methods Under GAAP

question 1

Multiple Choice

Which statement is correct about cost allocation methods under GAAP?

• A)LIFO method expenses the oldest costs first.
• B)LIFO method has the most recent costs on the balance sheet.
• C)LIFO method has the most recent costs in the income statement.
• D)LIFO is an acceptable cost allocation method.

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Definitions:

Non-Controlling Interest

The share of ownership in a subsidiary that cannot be directly or indirectly ascribed to the parent company.

Long Term Investments

Investments not expected to be sold or converted into cash within the next year, including stocks, bonds, and real estate.

Fair Value

The estimated price at which an asset or liability could be traded in a fair transaction between knowledgeable, willing parties under no force of sale.

Identifiable Net Assets Method

A technique used in business combinations that involves valuing a company based on the fair value of its identifiable net assets, excluding goodwill.