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This document contains 15 inventory valuation problems with multiple choice answers. It provides historical cost, net realizable value, replacement cost, and other relevant financial information for various inventory items. It asks the reader to calculate the proper inventory valuation and amount of gain or loss based on the lower of cost or net realizable value and other inventory accounting principles.
Исходное описание:
CHAP 31 Practical Acctg 1 Valix but with changed amounts
This document contains 15 inventory valuation problems with multiple choice answers. It provides historical cost, net realizable value, replacement cost, and other relevant financial information for various inventory items. It asks the reader to calculate the proper inventory valuation and amount of gain or loss based on the lower of cost or net realizable value and other inventory accounting principles.
This document contains 15 inventory valuation problems with multiple choice answers. It provides historical cost, net realizable value, replacement cost, and other relevant financial information for various inventory items. It asks the reader to calculate the proper inventory valuation and amount of gain or loss based on the lower of cost or net realizable value and other inventory accounting principles.
What amount should be reported as inventory at December 31,
2016? a. 25,000,000 b. 26,500,000 c. 24,000,000 d. 26,000,000
Problem 31-2 (AICPA Adapted)
ABC Company provided the following information for an inventory at December 31, 2016: Historical cost 6,000,000 Estimated selling price 6,500,000 Estimated completion and selling cost 750,000 Replacement cost 5,500,000
What amount should be reported as inventory at December 31,
2016? a. 5,500,000 b. 5,750,000 c. 6,000,000 d. 6,500,000
Problem 31-3 (AICPA Adapted)
ABC Company determined the following information for an inventory at December 31,2016: Historical Cost 10,000,000 Current replacement cost 7,000,000 Net realizable value 9,000,000 Net realizable value less a normal profit margin 8,500,000 Fair value 9,500,000
What amount should be reported as inventory at December 31,
2016? a. 7,000,000 b. 8,500,000 c. 9,000,000 d. 9,500,000
Problem 31-4 (IFRS)
ABC Company has two products in the inventory. Product X Product Y Selling price 10,000,000 15,000,000 Materials and conversion costs 7,500,000 9,000,000 General administration costs 1,500,000 4,000,000 Estimated selling costs 3,000,000 3,500,000
At December 31, 2016, the manufacture of items of inventory has
been completed but no selling costs have yet been incurred.
What is the measurement of the inventory at December 31, 2016?
a. 18,500,000 b. 16,000,000 c. 19,000,000 d. 16,500,000
Problem 31-5 (AICPA Adapted)
Based on a physical inventory taken at December 31, 2016, ABC Company determined the chocolate inventory on a FIFO basis at P26,000,000 with a replacement cost of P20,000,000. The entity estimated that, after further processing costs of P12,000,000, the chocolate could be sold as finished candy bars for P40,000,000. The normal profit margin is 10% of sales. Using the measurement at the lower of cost and net realizable value, what amount should be reported as chocolate inventory at December 31, 2016? a. 28,000,000 b. 20,000,000 c. 26,000,000 d. 24,000,000
Problem 31-6 (IAA)
ABC Company provided the following data for the current year: Inventory - January 1: Cost 15,000,000 Net realizable value 14,000,000 Net purchases 40,000,000 Inventory - December 31, 2016: Cost 20,000,000 Net Realizable Value 18,500,000
What amount should be reported as cost of goods sold?
a. 35,000,000 b. 35,500,000 c. 36,500,000 d. 36,000,000
Problem 31-7 (IAA)
ABC Company used the lower of cost or net realizable value method to value inventory. Data regarding the items in work in process inventory are presented below: Markers Pens Highlighters Historical cost 1,200,000 940,000 1,500,000 Selling price 1,800,000 1,250,000 1,800,000 Estimated cost to complete 240,000 250,000 340,000 Replacement cost 1,040,000 840,000 1,590,000 Normal profit margin as a percentage of selling price 25% 25% 10%
What is the measurement of the work in process inventory?
a. 3,600,000 b. 3,640,000 c. 3,380,000 d. 3,470,000
Problem 31-8 (IAA)
At December 31, 2016, ABC Company reported ending inventory at P15,000,000, and the allowance for inventory writedown before any adjustment at P750,000. Product 1 Product 2 Product 2 Product 3 Historical cost 4,000,000 5,000,000 3,500,000 2,500,000 Replacement cost 4,500,000 6,000,000 5,000,000 3,000,000 Sales price 6,000,000 6,500,000 6,250,000 5,000,000 Net realizable Value 2,750,000 5,500,000 4,750,000 1,750,000 Normal profit 1,250,000 750,000 1,500,000 1,500,000
What amount of loss on inventory writedown should be included
in cost of goods sold? a. 500,000 b. 1,000,000 c. 2,000,000 d. 1,250,000
Problem 31-9 (IAA)
ABC Company carried four items in inventory. The following per- unit data relate to these items at the end of first year of operations: Units Cost Sales Price Selling cost Normal profit Category 1: A 25,000 525 650 75 100 B 20,000 425 450 50 50 Category 2: C 40,000 250 225 25 25 D 30,000 325 375 75 50
1. What is the measurement of inventory under LCNRV applied to
individual item? a. 38,125,000 b. 41,375,000 c. 38,625,000 d. 39,375,000
2. What is the measurement of inventory under LCNRV applied to
inventory category? a. 39,375,000 b. 38,625,000 c. 41,375,000 d. 38,125,000
3. What is the measurement of inventory under LCNRV applied to
inventory as a whole? a. 41,375,000 b. 38,125,000 c. 39,375,000 d. 38,625,000
Problem 31-10 (IFRS)
ABC Company used the perpetual method to record inventory transactions for 2016. Inventory 9,500,000 Sales 32,500,000 Sales return 750,000 Cost of goods sold 23,000,000 Inventory losses 600,000
On December 24, 2016, the entity recorded a P750,000 credit sale
of goods costing P500,000. These goods were sold on FOB destination terms and were in transit on December 31, 2016. The good were included in physical count. The inventory on December 31,2016 determined by physical count had a cost of P10,000,000 and a net realizable value of P8,500,000. Any inventory writedown is not yet recorded. What amount should be reported as cost of goods sold for 2016? a. 25,100,000 b. 22,500,000 c. 23,600,000 d. 24,600,000
Problem 31-11 (AICPA Adapted)
ABC Company reported the following information for the current year: Sales (100,000 units at P750) 75,000,000 Sales discount 5,000,000 Purchases 46,500,000 Purchase discount 2,000,000
The inventory purchases during the year were as follows:
Units Unit cost Total cost Beginning inventory, January 1 20,000 300 6,000,000 Purchases, quarter ended March 31 30,000 325 9,750,000 Purchases, quarter ended June 30 40,000 350 14,000,000 Purchases, quarter ended Sept.30 50,000 375 18,750,000 Purchases, quarter ended Dec. 31 10,000 400 4,000,000 150,000 10,500,000 The accounting policy is to report the inventory in the financial statements at the lower of cost and net realizable value. Cost is determined that the replacement cost of inventory P350 per unit and the net realizable value was P360 per unit. The normal profit margin is P10 per unit. What amount should be reported as cost of goods sold for the current year? a. 32,500,000 b. 31,500,000 c. 33,500,000 d. 34,500,000
Problem 31-12 (IAA)
In 2015, ABC Company experienced a decline in the value of inventory resulting in a writedown from cost of P18,000,000 to net realizable value of P15,000,000. The entity used the allowance method to record the necessary adjustment. In 2016, market conditions have improved dramatically. On December 31,2016, the inventory had a cost of P25,000,000 and net realizable value of P23,000,000. What is included in the adjusting entry on December 31, 2016? A. Debit gain on reversal of inventory writedown P1,000,000 B. Credit gain on reversal of inventory writedown P2,000,000 C. Debit allowance for inventory writedown P1,000,000 D. Credit allowance for inventory writedown P2,000,000
Problem 31-13 (AICPA Adapted)
On December 31, 2015, ABC Company has outstanding purchase commitments for 50,000 gallons at P20 per gallon of raw material. It is determined that the market price of the raw material has declined to P17 per gallon on December 31, 2015 and is expected to decline further to P15 in the first quarter of 2016. What is the loss on purchase commitment that should be recognized in 2015? a. 4,250,000 b. 750,000 c. 1,250,000 d. 0
Problem 31-14 (IAA)
On October 1, 2015, ABC Company entered into a 6-month, P26,000,000 purchase commitment or a supply of a special product. On December 31, 2015, the market value of this material had fallen to P25,000,000 On March 31,2016, the market value of the purchase commitment is P24,500,000. What is the loss on purchase commitment to be recognized March 31, 2016? a. 1,000,000 b. 500,000 c. 1,500,000 d. 0
Problem 31-15 (IAA)
On November 15,2015, ABC Company entered into a commitment to purchase 10,000 ounces of gold on February 15,2016 at a price of P1,550 per ounce. On December 31, 2015, the market price of gold is P1,350 per ounce. On February 15,2016, the price of gold is P1,500 per ounce. 1. What is the loss on purchase commitment to be recognized on December 31,2015? a. 2,000,000 b. 500,000 c. 1,500,000 d. 0 2. What is the gain on purchase commitment to be recognized on February 15, 2015? a. 2,000,000 b. 1,500,000 c. 500,000 d. 0 3. What amount should be debited to purchases on February 15, 2016? a. 15,000,000 b. 15,500,000 c. 13,500,000 d. 17,500,000 4. What amount should be recognized as accounts payable on February 15, 2016? a. 13,500,000 b. 15,500,000 c. 17,500,000 d. 15,000,000
Problem 31-16 (IAA)
On November 15, 2015, ABC Company entered into a commitment to purchase 100,000 barrels of aviation fuel for P275 per barrel on March 31, 2016. The entity entered into this purchase commitment to protect itself against the volatility in aviation fuel market. By December 31, 2016, the purchase price of aviation fuel had fallen to P200 per barrel. However, by March 31, 2016, when the entity took delivery of the 100,000 barrels, the price of aviation fuel had risen to P300 per barrel. 1. What amount should be recognized as gain on purchase commitment for 2016? a. 7,500,000 b. 10,000,000 c. 2,500,000 d. 0 2. What amount should be debited to purchases on March 31, 2016? a. 25,000,000 b. 25,500,000 c. 20,000,000 d. 30,000,000 Problem 31-17 (AICPA Adapted) On January 1, 2016, ABC Company signed a three-year, noncancelable purchase contract, which allows ABC to purchase up to 5,000 units of a computer part annually from DEF Company at P500 per unit and guarantees a minimum annual purchase of 1,000 units. During 2016, the part unexpectedly became obsolete. ABC had 2,500 units of this inventory on December 31, 2016, and believed these parts can be sold as scrap for P100 per unit. 1. What amount of loss from the purchase commitment should be reported in the 2016 income statement? a. 1,200,000 b. 1,000,000 c. 800,000 d. 1,800,000 2. What amount should be recognized as loss on inventory writedown in 2016? a. 1,800,000 b. 2,800,000 c. 1,000,000 d. 0