Question Details

The gross profit method can be used to approximate the dollar amount of inventory 



True or false:
1.	If the contract price on a noncancelable purchase commitment exceeds the market price, the buyer should recognize a liability and corresponding loss in the period in which the market decline takes place.
2.	When a buyer enters into a formal, noncancelable purchase contract, an asset and a liability are recorded at the inception of the contract.

	3.	In late 2011, Daisy Company entered into a noncancelable purchase contract for which the contract price is now greater than the market price, and Daisy expects that losses will occur when the purchase is executed in early 2012. Under IFRS, Daisy should recognize a liability and corresponding loss in 2011.

	4.	Under International Financial Reporting Standards (IFRS), a company who recorded a loss on a purchase commitment in 2011 cannot record a recovery of that loss in 2012 if price improve.

	5.	The gross profit method can be used to approximate the dollar amount of inventory on hand.



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