Question : 51. The market value for inventory valuation purposes generally means A. replacement : 1230666

51. The market value for inventory valuation purposes generally means  
A. replacement cost
B. sellers bid price
C. buyers offer price
D. the mean between the sellers bid price and the buyers offer price
E. present value of future cash flows

52. 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

53. Why might inventories increase in market value subsequent to acquisition? 
A. a shortage of a key raw material
B. a competitor may introduce a technologically superior product
C. a product may include materials found to contain a health hazard
D. the introduction of a lower-cost raw material
E. all of the above

54. Which of the following is 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.

55. U.S. GAAP specifies that, in the context of inventories, market means  
A. replacement cost, only
B. net realizable value, only
C. replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.
D. replacement cost, except that market may not exceed net realizable value and may not be less than present value of future cash flows.
E. replacement cost, except that market may not exceed net realizable value and may not be less than the total amount of undiscounted future cash flows

56. IFRS specifies that, in the context of inventories, market means  
A. replacement cost, only
B. net realizable value, only
C. replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.
D. replacement cost, except that market may not exceed net realizable value and may not be less than present value of future cash flows.
E. replacement cost, except that market may not exceed net realizable value and may not be less than the total amount of undiscounted future cash flows

57. Bad Company had beginning inventory of $19,000, purchases were $100,000, and ending inventory had a cost of $25,000 and a market value of $20,000. Which of the following is not true? 
A. Cost of Goods Sold is $5,000 larger when the firm records ending inventory at lower of cost or market than when it records the inventory at acquisition cost.
B. The loss of $5,000 increases Cost of Goods Sold by $5,000 and therefore reduces net income by $5,000, compared to the acquisition cost basis.
C. The firm should disclose the existence of large write-downs included in Cost of Goods Sold in the notes so that users of financial statements understand the components of the Cost of Goods Sold account.
D. The firm should disclose the existence of large write-downs included in Cost of Goods Sold in Managements’ Discussion and Analysis so that users of financial statements understand the scope of the asset impairment..
E. none of the above

58. Bad Company had beginning inventory of $19,000, purchases were $100,000, and ending inventory had a cost of $25,000 and a market value of $20,000. The same inventory increased $3,000 in market value in the subsequent period. Which of the following is not true? 
A. Under U.S. GAAP, the firm would continue to record the inventory at $20,000, the lower of cost or market.
B. Under IFRS, the firm would reverse a portion of its previous impairment.
C. If Bad Company is in an industry that frequently experience inventory price fluctuations, the firm may use an allowance account to record lower-of-cost-or-market adjustments.
D. The firm should disclose the existence of large inventory write-ups in Managements’ Discussion and Analysis so that users of financial statements understand the reversal of the previous asset impairment..
E. none of the above

59. The lower-of-cost-or-market basis for inventory valuation 
A. is a conservative accounting policy
B. recognizes losses from decreases in market value before a sale occurs
C. recognizes gains from increases in market value above original acquisition cost only when a sale occurs
D. reports inventories on the balance sheet at amounts that are never greater, but may be less, than acquisition cost.
E. all of the above

60. Which of the following is/are not true regarding the lower-of-cost-or-market basis for inventory valuation? 
A. It is a conservative accounting policy
B. It recognizes losses from decreases in market value before a sale occurs
C. It recognizes gains from increases in market value above original acquisition cost only when a sale occurs
D. reports inventories on the balance sheet at amounts that are never greater, but may be less, than acquisition cost.
E. reports inventories on the balance sheet at amounts that are equal to the acquisition cost less a normal profit margin.