Which of the Following Is True Regarding the Remeasurement of Inventories

question 55

Multiple Choice

Which of the following is true regarding the remeasurement of inventories upward to an amount exceeding their acquisition cost?

• A)Acquisition cost leads to a more conservative measure of inventories and net income during the periods prior to sale.
• B)An increase in the market value of inventory likely permits the firm to raise its selling price.
• C)The firm realizes the benefit of that increase in the period of sale when the firm actually obtains a higher selling price.
• D)Both U.S.GAAP and IFRS delay recognition of any increase in inventory valuation in net income until the period of sale.
• E)all of the above

---

Definitions:

Raw Materials

Basic substances in their natural, modified, or semi-processed states, used as inputs to a production process for manufacturing goods.

Direct Labor

The cost of wages for employees who are directly involved in the production of goods or services, an integral part of manufacturing costs.

Raw Materials

The basic substances used in production processes to create goods, often transformed or converted during the manufacturing.

Cost of Goods Available

The total cost of inventory that is available for sale during a given period.