PRC-1 · Chapter 7 · Question 74 of 100
A business imports raw materials and pays non-refundable import duties to the authorities. How are these duties treated in the financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Included in the capitalized cost of the raw materials.
Explanation
Non-refundable import duties and taxes are a necessary cost of acquiring the inventory and bringing it to its location, and therefore must be included in the cost of the inventories.
More IAS 2: Inventories MCQs
- Q76If circumstances that previously caused inventory to be written down below cost no longer exist, resulting in an increase in NRV, what is…
- Q77Which of the following costs is treated as a period expense rather than being capitalized into the cost of ending inventory?
- Q78Under a perpetual inventory system, what is the correct double entry for recording a purchase return of goods previously bought on credit?
- Q79Which of the following best describes the 'Retail Method' of estimating inventory cost?
- Q80Under normal circumstances, raw materials are not written down below cost if the finished products they make will be sold at a profit…