Question 1

Commodity broker-traders

Accepted Answer

A)  Produce or raise commodities such as corn, wheat, or precious metals. 
B)  Hold their inventory primarily to sell the commodities in the near term and generate a profit from price fluctuations. 
C)  Value their inventories at the lower-of-cost-or-net realizable value (LCNRV). 
D)  All of the choices are correct regarding broker-traders.

Question 2

Replenish, Inc. develops and produces sports drinks for sale throughout the United States and Europe. The International Accounting Standards Board (IASB) prohibits Replenish, Inc. from using which of the following cost flow assumptions for its inventory?

Accepted Answer

A)  LIFO (last-in, first-out). 
B)  Specific identification. 
C)  Weighted-average. 
D)  The IASB allows any of these cost flow assumptions as long as the company uses it consistently.

Exam 9: Inventories: Additional Valuation Issues

Commodity broker-traders

Replenish, Inc. develops and produces sports drinks for sale throughout the United States and Europe. The International Accounting Standards Board (IASB) prohibits Replenish, Inc. from using which of the following cost flow assumptions for its inventory?