Questions from Intermediate Accounting

Q: Explain the (a) lower of cost or net realizable value

Explain the (a) lower of cost or net realizable value (LCNRV) approach and the (b) lower of cost or market (LCM) approach to valuing inventory.

Q: Describe the alternative approaches for recording inventory write-downs.

Describe the alternative approaches for recording inventory write-downs.

Q: AAA Hardware uses the LIFO method to value its inventory. Inventory

AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 10,000 units of the company’s one product. These units cost $15 each. During the year, 60,...

Q: Explain the gross profit method of estimating ending inventory.

Explain the gross profit method of estimating ending inventory.

Q: The fair value of depreciable assets of Penner Packaging Company exceeds their

The fair value of depreciable assets of Penner Packaging Company exceeds their book value by $12 million. The assets’ average remaining useful life is 10 years. They are being depreciated by the strai...

Q: The Rider Company uses the gross profit method to estimate ending inventory

The Rider Company uses the gross profit method to estimate ending inventory and cost of goods sold. The cost percentage is determined based on historical data. What factors could cause the estimate of...

Q: Both the gross profit method and the retail inventory method provide a

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?

Q: What is a consignment arrangement? Explain the accounting treatment of goods

What is a consignment arrangement? Explain the accounting treatment of goods held on consignment.

Q: Define each of the following retail terms: initial markup, additional

Define each of the following retail terms: initial markup, additional markup, markup cancellation, markdown, markdown cancellation.

Q: Explain the steps required to correct an error in accounting for property

Explain the steps required to correct an error in accounting for property, plant, and equipment and intangible assets that is discovered in a year subsequent to the year the error was made.