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Question: National Drilling is a manufacturer of drill


National Drilling is a manufacturer of drill bits for large oil rigs that operate around the world. A major component in the manufacturing of the drill bits is diamonds. As a result of an increase in oil drilling due to the increase in oil prices, National Drilling has received, and is expected to receive, an increase in orders for new and replacement drill bits. With such a potential demand, National Drilling has purchased a large quantity of diamonds. Since diamonds are considered a precious metal, National Drilling is contemplating the proper valuation of its inventory, which is currently above cost.
Management has concluded that precious metals with a fixed monetary value and without substantial marketing costs can be recorded at market value as discussed at a recent oil and gas conference that National’s accounting staff attended. As a member of the staff, you question the proper valuation of the diamond inventory.

Required:

Utilizing the FASB’s Codification, determine with specific authoritative reference the proper valuation of the diamond inventory. What specific Codification references support your conclusion?



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> The BDC Partnership has three partners with the following partnership interest percentages and tax-year ends: B has 35 percent ownership and a Dec. 31 year end; D owns 45 percent and has a June 30 year end, and C owns 35 percent and has an Oct. 30 year e

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> Jim and Angie form the JAZ Partnership with Zoe by contributing $75,000 each to partnership equity. Zoe, the third partner, contributes property with a basis of $50,000 and fair market value of $75,000. The three are equal partners in the partnership. a.

> Refer to the information in problem 21, except that John operates Mason Enterprises as an S corporation. How would John report the income and loss items from S corporation operations? From problem 21: John Mason operates a consulting business, Mason Ent

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> Carl purchased a Jaguar automobile for $60,000 to use exclusively in his business. He boasts that he can recover his cost through MACRS depreciation deductions over five years. What restrictions reduce the tax benefits of purchasing a luxury automobile f

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> Discuss the environmental factors that influence the standard setting process.

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> Access the AICPA website (aicpa.org) and click on the publications link and name two major publications of the AICPA.

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2.99

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