True or False 1. When merchandise inventory is shown on the balance sheet, both

Question

True or False
1. When merchandise inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown

2. The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item-by-item, by major classification of inventory, or by the total inventory.

3. To a major resort, timeshare properties would be classified as property, plant, and equipment

4. It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

5. Accounts receivable contributed to the partnership are recorded at their face value.

Multiple Choice
1. Expected useful life is:
a. Calculated when the asset is sold
b. Estimated at the time that the asset is placed in service
c. None of these answers is correct
d. Determined each year that the depreciation calculation is made

Explanation / Answer

1. True.These should be shown in the notes at the end of the Balance Sheet. 2. The lower-of-Cost -or -market method of determining the value of ending inventory can be applied item-by-item. 3.True. 4.True. 5.True. 6.Expected useful life is estimated at the time the asset is placed in service.

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