PRC-1 · Chapter 7 · Question 73 of 100
How does IAS 2 require trade discounts, rebates, and similar items to be treated when determining the cost of purchase for inventory?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) They are deducted in determining the costs of purchase.
Explanation
IAS 2 explicitly states that trade discounts, rebates, and other similar items are deducted in determining the costs of purchase, meaning the inventory is capitalized at the net amount.
More IAS 2: Inventories MCQs
- Q75In which of the following scenarios does IAS 2 require the use of the 'Specific Identification' method for assigning costs to inventory?
- 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?