Question #20
Reading: Reading 9 Employee Compensation - Post-Employment and Share-Based
PDF File: Reading 9 Employee Compensation - Post-Employment and Share-Based.pdf
Page: 7
Status: Incorrect
Correct Answer: A
Your Answer: B
Question
Under U.S. GAAP, capitalized periodic pension costs included in the value of ending inventory is most likely:
Answer Choices:
A. to be amortized over the service lives of employees
B. not allowed
C. to be expensed as part of cost of goods sold when the inventory is sold
Explanation
Pension costs included in the cost of production of goods (e.g., labor costs included in the
value of work-in-process or finished goods) may be capitalized as part of valuation of
ending inventory. When this inventory is eventually sold, such costs are expensed as a
component of cost of goods sold.