Which of the Following Is a CORRECT Statement About the Lower-Of-Cost-Or

question 121

Multiple Choice

Which of the following is a CORRECT statement about the lower-of-cost-or market rule?

• A)Under GAAP,once inventory has been written down to market value,the write-downs can be reversed in future periods.
• B)Under GAAP,the lower-of-cost-or-market rule is optional.
• C)Under IFRS,lower-of-cost-or-market write-downs cannot be reversed.
• D)Under IFRS,lower-of-cost-or-market write-downs can be reversed.

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Definitions:

Compounded

The method of calculating interest where the accumulated interest is added back to the principal sum, so that interest in the next period is then earned on the principal plus previously accumulated interest.

Principal

The original amount of money invested or loaned, before interest.

Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods.

Semi-annually

Occurring twice a year or every six months.