Which of the Following Is/are Not True Regarding Inventories When

question 64

Multiple Choice

Which of the following is/are not true regarding inventories when their replacement cost declines below acquisition cost?

• A)Both U.S.GAAP and IFRS require firms to write down inventories when their replacement cost, or market value, declines below acquisition cost.
• B)Accountants refer to the inventory as impaired and to this valuation as the lower-of-cost-or-market basis.
• C)The journal entry to record the inventory impairment results in a loss and a new balance sheet carrying value that is the lower of cost or market value.
• D)U.S.GAAP permits firms to recognize subsequent value increases, as long as the new value remains less than the original acquisition cost.
• E)IFRS permits firms to reverse previous impairments, up to the amount of the original acquisition cost of the inventory, if the circumstances that caused the inventory impairment no longer exist.

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Definitions:

Combination Circuits

Electrical circuits that contain both series and parallel connections within the same circuit.

Parallel Paths

In electrical circuits, parallel paths refer to configuration where components are connected alongside each other, leading to multiple pathways for current to flow, thus reducing the total resistance of the circuit.

Combination Circuit

A circuit that contains both series and parallel paths.

Series Components

Electrical components connected in a circuit in such a manner that there is only one path for current flow, causing the current through each component to be the same.