Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 9.7Q
Both the gross profit method and the retail inventory method provide a way to estimate ending inventory. What is the main difference between the two estimation techniques?
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Both the gross profit method and the retail inventory method provide a way to estimate ending inventory. What is the main difference between the two estimation techniques?
What is the purpose of disclosing the difference between the reported LIFO inventory amounts and replacement cost, assuming that replacement cost is equivalent to a FIFO basis?
Which of the following statements about FIFO is true?
Select one:
a. All of the statements are correct
b. Cost of goods sold is calculated using the costs of the earliest purchased inventory.
c. The value of merchandise inventory is made up of the costs of the most recently purchased inventory.
d. Under FIFO, a schedule is used to track the different costs of purchased inventory.
Chapter 9 Solutions
Intermediate Accounting, 10 Ed
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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- Considering the following information, and applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?arrow_forwardWhat are two advantages and disadvantages of the periodic inventory system?arrow_forwardThe following information is taken from a companys records. Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?arrow_forward
- Which of these statements is false? A. If cost of goods sold is incorrect, ending inventory is usually incorrect too. B. C. D.arrow_forwardExplain why a company might want to utilize the gross profit method or the retail inventory method for inventory valuation.arrow_forwardWhat is the basic assumption underlying the gross profit method? How may the gross profit percentage for the prior year be modified to provide a better estimate of the inventory value?arrow_forward
- Which inventory method provides a better matching ofcurrent costs with sales revenue on the income statementbut also results in older values being reported for inventory on the balance sheet?arrow_forwardWhich of the following items should not be included in the cost of inventory? Select one: O a. The initial purchase price of inventory O b. Freight out cost to deliver inventory to a customer c. Insurance cost paid to purchase the inventory d. Delivery cost paid to purchase the inventoryarrow_forwardThe primary purpose for using an inventory cost flowassumption is to:a. Parallel the physical flow of units of merchandise.b. Offset against revenue an appropriate cost of goodssold.c. Minimize income taxes.d. Maximize the reported amount of net income.arrow_forward
- To determine the cost of ending inventory using the LIFO method: A. the average cost of the inventory is used. B. the beginning inventory and earliest purchase costs are used. C. the specific unit cost of the inventory is used. D. the latest purchase costs are used. thanksarrow_forwardWhich of the following is not a step in the retail inventory method process? a.Compute the cost of goods available for sale. b.Compute the ending inventory at retail by subtracting sales at retail from goods available for sale at retail. c.Estimate the cost of the ending inventory by multiplying the ending inventory at retail by the cost-to-retail ratio. d.Compute the cost-to-retail ratio.arrow_forwardIn a cost-divided income statement, changes in purchased goods (merchandise) must be reported under the item Change in inventory, etc. choose an alternative True Falsearrow_forward
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