Under the perpetual inventory system, inventory shifts from an asset to an expense when the seller delivers the goods to the buyer. In a period of rising prices, FIFO and LIFO will produce the same cost for ending inventory. Any cost to get machinery up and running and ready for its intended use should be part of the cost of the asset and depreciated. At the end of its useful life, the book value of an asset must be zero. Gains on the sale of equipment increase net income while losses on the sale of equipment decrease net income. Intangibles can have finite or infinite lives. Unrealized gains and losses result from changes in the investments fair value. Interest expense on a note payable is only recorded at maturity. ABC Company purchases inventory from XYZ Company with the shipping terms FOB shipping point. This means that: XYZ Company owns the goods while they are in transit. legal title passes to ABC Company when they receive the inventory. XYZ Company will pay the freight on this transaction. ABC Company will include the goods in their inventory as soon as they leave the shipping dock. When applying the lower-of-cost-or-market rule, market value generally refers to: FIFO cost using the periodic method. LIFO cost using the periodic method. current sales price of the inventory. current replacement cost of the inventory. When comparing the FIFO and LIFO inventory methods: LIFO values inventory at the newest costs. LIFO reports the most up-to-date inventory cost on the balance sheet. FIFO results in the most realistic net income figure. FIFO matches old inventory costs against revenue