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During a period of falling prices, which of the following inventory valuation methods would yield the highest cost of goods sold?
Under FIFO, the oldest inventory goes to COGS. In a period of falling prices, the oldest inventory has the highest cost, driving up COGS.
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Troy, Inc has inventory with a FIFO cost of $17,730, net realizable value of $17,850, replacement cost of $17,490, and net realizable value less normal profit of $17,545. What amount should Troy report as ending inventory in its balance sheet at year-end?
Under FIFO, the oldest inventory goes to COGS first. Here, a total of 10,800 units were sold; the first 8K of these were included in beginning inventory and cost $1 each. The remaining 2,800 units were included in the March 10 purchase at $3 each. Therefore, COGS is calculated as 8,000 units x $1 per unit +2,800 units x $3 per unit.
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Larry, Inc had beginning inventory in January of Year 2 of 10,000 units costing $1 each. On February 14, 4,000 units were purchased costing $3 each. On April 20, 12,000 units were sold. On November 22, 6,000 more units were purchased at $6 each. What will Larry record as its cost per unit under a weighted average inventory system?
Under the weighted average costing method, cost per unit is the average price of all inventory purchased. Larry spent a total of $58K (10,000 units x $1 + 4,000 units x $3 each + 6,000 units x $6). This total is divided by the total number of units purchased, which is 20K. To calculate cost per unit, the total cost of $58K is divided by total units of 20K.
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Which of the following statements is a primary objective of accounting for income taxes? To:
The primary objective of income tax accounting is to recognize and account for deferred tax assets and liabilities.
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As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of a company's plant assets exceeded the tax basis. Assuming the company had no other temporary difference, the firm should report a:
If book basis of an asset is greater than tax basis, a deferred tax liability should be established for the tax effect of the difference.
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Of the following, which would not be included in Cost of Goods Sold?
DM, DL, and MOH are all included in Cost of Goods Manufactured and Cost of Goods Sold.
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