Which Presumption Does IAS 12 Make About the Way an Entity

question 8

Multiple Choice

Which presumption does IAS 12 make about the way an entity will recover the carrying amount of an asset?

• A)The assumption that the carrying amount will be recovered through use
• B)The assumption that the carrying amount will be recovered through sale
• C)The assumption that the carrying amount will be recovered through inflation
• D)The assumption that the carrying amount will be recovered through acquisition

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Definitions:

Holding Cost

The expenses associated with keeping inventory in stock, such as storage, insurance, and spoilage costs.

Economic Order Quantity

A formula used to determine the most cost-effective quantity to order, balancing ordering costs with holding costs.

EOQ

Economic Order Quantity, a formula used in inventory management to determine the optimal order size that minimizes total costs of inventory holding and ordering.

Ordering Cost

The expenses associated with placing an order for supplies or inventory, including costs related to paperwork, communication, and logistics.