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When the cost-of-goods-sold method is used to record inventory at net realizable value the market value figure for ending inventory is substituted for cost and

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When the cost-of-goods-sold method is used to record inventory at net realizable value the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold. Othere is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale. only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements. a loss is recorded directly in the inventory account by crediting Inventory and debiting Loss on Inventory Decline. If a corporation purchases land and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on the contemplated future use of the parking lot. the significance of the cost allocated to the building in relation to the combined cost of the land and building. the intention of management for the property when the building was acquired. the length of time for which the building was held prior to its demolition. Which of the following statements is true regarding capitalization of interest? The minimum amount of interest to be capitalized is determined by multiplying a weighted average interest rate by the amount of average accumulated expenditures on qualifying assets during the period. The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred. When excess borrowed funds not immediately needed for construction are temporarily invested, any interest earned should be offset against interest cost incurred when determining the amount of interest cost to be capitalized, Interest cost capitalized in connection with the purchase of land to be used as a building site should be debited to the land account and not to the building account

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