Which of the following is true regarding the use of LIFO for inventory valuation?
a. If LIFO is used for external financial reporting, then it must also be used for internal reports.
b. For purposes of external financial reporting, LIFO may not be used with the lower of cost or market approach.
c. If LIFO is used for external financial reporting, then it cannot be used for tax purposes.
d. None of these answers are correct.
Answer: D
Accounting
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- On October 1, 20X3 , Wand , Inc. committed itself to a formal plan to sell its Kam division's assets early in 20X4. On that date, Wand estimated that the fair value of the component's assets was $25,000 less than the carrying value. Wand also estimated that Kam would incur operating losses of $100,000 for the period of October 1, 20X3 through December 31, 20X3 and $50 ,000 for the period January 1, 20X4 through February 28, 20X4. All estimates proved to be materially correct. Disregarding income taxes, what should Wand report as loss from discontinued operations in its comparative 20X3 and 20X4 income statements?
- During Year 2, Orea Corp. decided to change from the FIFO method of inventory valuation to the weighted average method. Inventory balances under each method were as follows:
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- In open market transactions , Gold Corp. simultaneously sold its long-term investment in Iron Corp. bonds and purchased its own outstanding bonds. The broker remitted the net cash from the two transactions. Gold's gain on the purchase of its own bonds exceeded its loss on the sale of the Iron bonds. Assume the transaction to purchase its own outstanding bonds is unusual in nature and has occurred infrequently. Under U.S. GAAP , Gold should report the:
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- How should the effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate be reported?
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- According to the IASB conceptual framework, the usefulness of providing information in the financial statements is subject to the constraint of:
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- According to the FASB conceptual framework, which of the following statements conforms to the realization concept?
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- What is the formula to calculate basic interest?
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