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Question 1: If the net realizable value of the by-product of a joint production process is significant, how shall it be accounted for?
a. The net realizable value of the by-product shall be recorded as deduction from the total joint manufacturing cost thereby reducing the cost of the main products also known as replacement cost method.
b. The net realizable value of the by-product shall be recorded as addition to the net sales of the main product.
c. The net realizable value of the by-product shall be recorded as deduction from the cost of sales of the main product.
d. The net realizable value of the by-product shall be recorded as other income.
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