Which of the following statements about inventory valuation areincorrect ?AA taxpayer may write...

Which of the following statements about inventory valuation are incorrect ?
A
A taxpayer may write down inventory below market if he has
offered for sale the same merchandise at below market
value.
B
FIFO treats the inventory purchased first as the first
inventory sold.
C
If the “dollar value” LIFO method is used it is optional to
break up the inventory into “pools”.
D
LIFO treats the inventory purchased last as the first
inventory sold.

Solutions

Expert Solution

Incorrect answer is C.

If the “dollar value” LIFO method is used it is optional to
break up the inventory into “pools”.

In dollar value LIFO method, it is not optional to break up the inventory into “pools”. In this method, all the inventory is divided into pools and then the value is measured in terms of dollar value.

Rest all options are correct.

Inventory is measured at cost or market price whichever is lower.

In FIFO method,inventory purchased first is the first inventory sold.

In LIFO method, the inventory purchased last is the first inventory sold.

jeff jeffy answered 2 years ago

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