Asked by Helio Hernandez on Jun 08, 2024
Verified
For non-profit entities that are also merchandisers, inventory is valued at:
A) lower of cost and current replacement cost.
B) lower of cost and net realisable cost.
C) lower of cost and estimated selling price of the inventory.
D) net reliable cost.
Non-profit Entities
Organizations that operate for charitable, educational, cultural, or social welfare purposes rather than for profit.
- Comprehend the fundamentals of inventory valuation and the inclusion of costs as per accounting norms.
Verified Answer
DA
Djigbodi AGBEMADONJun 12, 2024
Final Answer :
A
Explanation :
For non-profit entities that are also merchandisers, inventory is valued at the lower of cost and current replacement cost. This is because the primary objective of non-profit entities is not to make a profit from selling inventory, but rather to support their mission or cause. Therefore, it is appropriate to value inventory at its cost or current replacement cost, whichever is lower, in order to ensure that the entity is not overvaluing its inventory and potentially misleading stakeholders about the true level of resources available for its mission or cause.
Learning Objectives
- Comprehend the fundamentals of inventory valuation and the inclusion of costs as per accounting norms.
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