Why Might a Large Private Company Choose to Use Full

question 30

Multiple Choice

Why might a large private company choose to use full IFRS?

• A)Its assets exceed $10,000,000.
• B)It only uses debt financing.
• C)It only uses equity financing.
• D)It competes with public companies for financing.

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Definitions:

Absorption Costing

An accounting method that integrates all components of manufacturing expenses—materials, labor, and every overhead, be it variable or fixed—into the final product cost.

Variable Costing

An accounting approach where only variable production costs are assigned to inventory, distinguishing it from absorption costing by treating fixed overhead as a period cost.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net income or loss.

Variable Costing

An accounting method that only assigns variable costs to inventory, excluding fixed manufacturing overhead costs.