Which of the following is not an acceptable method for accounting for by-products in a joint manufacturing process?
A)Costs before the split-off point are allocated to by-products.
B)The estimated sales value of the by-product reduces the cost of the main product.
C)The joint costs allocated to by-products are included in an account called "By-products Inventory."
D)In some instances, the revenue from selling by-products may be treated as "other income" on the income statement.

Question

Quizplus · Accepted Answer

Joint costs are not allocated to by-products. When accounting for by-products, the estimated sales value of the by-product reduces the cost of the main product, and is recorded to an account called "By-products Inventory." Alternatively, if the sales value is not easily estimated, the sales may be recorded as "Other Income."

Which of the Following Is Not an Acceptable Method for Accounting