Taxes may be included in the cost of inventories except for those taxes that are:
A) levied on the inventories by a foreign government.
B) recoverable by the entity from the taxation authority.
C) in the nature of import duties.
D) imposed on the raw materials component of manufactured inventories.

Question

Quizplus · Accepted Answer

Taxes that are recoverable by the entity from the taxation authority should not be included in the cost of inventories as they can be claimed back. Other taxes, such as those levied by a foreign government, in the nature of import duties, or imposed on the raw materials component of manufactured inventories, should be included in the cost of inventories as they are part of the cost of acquiring or producing them.

Taxes May Be Included in the Cost of Inventories Except