The cost of abnormal losses (net of disposal costs)should be written off as

Question

Quizplus · Accepted Answer

Abnormal losses are considered as an expense and should be written off in the income statement. However, disposal costs should be capitalized as part of the cost of production. Therefore, the cost of abnormal losses (net of disposal costs) should not be written off as an expense. Instead, it should be included in the cost of production and carried forward as an inventory value until the merchandise is sold. As a result, the correct answer is C, which states no for the first option and yes for the second option.

The Cost of Abnormal Losses (Net of Disposal Costs)should Be