Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 8 - Valuation of Inventories: A Cost-Basis Approach - Concepts for Analysis - Instructions - Page 484: CA8-1c

Answer

Possible reasons to postpone recording the transaction include: 1. For tax purposes (minimize) 2. Minimizing the impact of the purchased inventory on other ratios such as inventory turnover ratio. 3. Aiming to maintain current ratio unaffected by the newly acquired inventory.

Work Step by Step

Including the newly acquired inventory will not only affect the ratios but also require resources that may be used more effectively at a later period.
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