The Following Information Pertains to Inventory Held by a Company

question 2

Multiple Choice

The following information pertains to inventory held by a company at December 31, 2011. What is the amount of inventory loss shown on the income statement under IFRS?

• A) $1,000.
• B) $2,000.
• C) $4,000.
• D) $5,000.
• E) $6,000.

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Definitions:

IRR

Internal Rate of Return; a metric used in financial analysis to estimate the profitability of potential investments.

Cost of Capital

The rate of return that a company must pay on its investment and financing activities to maintain its current market value.

Cash Inflows

Money received by a business or organization through its activities, such as sales revenue, investment income, or financing.

Profitability Index

A ratio that calculates the relative profitability of an investment by dividing the present value of future expected cash flows by the initial investment cost.