The IASB Web site (www.iasb.org) summarizes each of the current International Financial Reporting Standards.

Required: Answer each of the following questions.

a. In measuring inventories at the lower of cost or net realizable value, does net realizable value mean:

i. estimated replacement cost, or ii. estimated selling price less estimated costs to complete and sell the inventory?

b. Under International Financial Reporting Standards, which of the following methods is (or are) acceptable to account for an investment in a joint venture?

i. cost method ii. equity method iii. proportionate consolidation iv. consolidation

c. Which of the following would be classified as an extraordinary item?
i. loss from settlement of a product liability lawsuit ii. claims paid by an airline as a result of a plane crash iii. destruction of a communications satellite during launch iv. none of the above

d. In Year 1, an enterprise accrued its warranty obligation based on its best estimate of the expected cost to repair defective products during the three-year warranty coverage period. During Year 2, warranty claims were significantly more than expected due to unrecognized quality-control problems in Year