Question

In: Accounting

Discuss the rationale for your answer.

Which of the two common approaches used to account for by-product/scrap provides better information to management? Discuss the rationale for your answer.

Solutions

Expert Solution

One approach is to ignore by-product inventory completely until it is sold. Only then does the revenue it generates acknowledge the existence of the by-product. This revenue is carried to the income statement as an increase to net income of the period. The second approach is to record, at the split-off point, the final net realizable value of the by-product recovered. The net realizable value is credited as a reduction of the joint process costs that gave rise to the by-product. The second approach is theoretically preferable because it causes the benefit to be matched with the source of the benefit – namely, the joint process costs being incurred during the period.


(1) One approach is to ignore by-product inventory completely until it is sold. (2) The second approach is to record, at the split-off point, the final net realizable value of the by-product recovered. 

Related Solutions

Answer each question. Type question and answer, provide a cited rationale for your answers. Answer the...
Answer each question. Type question and answer, provide a cited rationale for your answers. Answer the following questions using the discussion board: • What is Orthostatic Hypotension? • Name the Chain of Infection • How do you collect data about pain from your patients? • Name the types of isolation precaution. and why I choose these answer
Directions: Select the correct answer to the following questions and provide a rationale for your selection...
Directions: Select the correct answer to the following questions and provide a rationale for your selection in the spaces provided. 9. A nurse who has just assumed the role of unit manager is examining her skills in interprofessional collaboration. Which of the following actions support interprofessional collaboration? (Select all that apply.) ____ A. Use aggressive communication when addressing the team. ____ B. Recognize the knowledge and skills of each member of the team. ____ C. Ensure that a nurse is...
As a businessperson, could you support ambush marketing? Provide the rationale for your answer. If you...
As a businessperson, could you support ambush marketing? Provide the rationale for your answer. If you do not support ambush marketing, what do you think are appropriate consequences for ambush marketers?
a.) Describe an outcome that would result in a Type I error. Explain the rationale for your answer.
Two types of medication for hives are being tested. The manufacturer claims that the new medication B is more effective than the standard medication A and undertakes a comparison to determine if medication B produces relief for a higher proportion of adult patients within a 30-minute time window. 20 out of a random sample of 200 adults given medication A still had hives 30 minutes after taking the medication. 12 out of another random sample of 200 adults given medication...
Answer the following multiple choice questions on oral hygiene and provide rationale for your choices. 16.1)...
Answer the following multiple choice questions on oral hygiene and provide rationale for your choices. 16.1) While caring for dentures, which of the following statements are WRONG? Select 3 (three) answers. i) Dentures must be soaked in commercial denture solution daily. ii) While cleaning, it is ideal to place the dentures in a sink half filled with water and without a lining surface iii) Use of detergent on dentures are not advised . iv) All surfaces of dentures should be...
1. Discuss reasons why females are affected with UTI's more than males. Provide your rationale for...
1. Discuss reasons why females are affected with UTI's more than males. Provide your rationale for this. 2. Offer suggestions to orevent these infections. 3. What are treatment options
Discuss the rationale and main criticisms of short-selling restrictions.
Discuss the rationale and main criticisms of short-selling restrictions.
Discuss five main provisions of a mortgage and the rationale for each
Discuss five main provisions of a mortgage and the rationale for each
16)   Answer the following multiple choice questions on oral hygiene and provide rationale for your choices: 16.3)   Which...
16)   Answer the following multiple choice questions on oral hygiene and provide rationale for your choices: 16.3)   Which of the following statements are WRONG in relation to oral care? Select 3 (three) answers. a) Regular flossing is recommended for health teeth and gums b) Using lemon and glycerine for oral care is good for oral cavity c) Best way to moisturize oral mucosa is by using mouthwash twice daily d) Mouthwashes should be free from alcohol, hydrogen peroxide and sodium bicarbonate e)...
Which theories of trade support government intervention in trade? Discuss their rationale. Discuss the political and...
Which theories of trade support government intervention in trade? Discuss their rationale. Discuss the political and economic arguments used by governments to justify the use of various trade policy instruments (tariffs, quotas, VERs etc.).
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT