Taxes may be included in the cost of inventories unless they are:
A) levied on the entity by a foreign government.
B) in respect to the raw materials component of manufactured inventories.
C) recoverable by the entity from the taxing authority.
D) in the nature of import duties.

Question

Quizplus · Accepted Answer

Taxes that are recoverable by the entity from the taxing authority should not be included in the cost of inventories as they will be eventually reimbursed. The other options do not affect whether taxes should be included in the cost of inventories.

Taxes May Be Included in the Cost of Inventories Unless