Question

In a process costing system, actual loss was lower than the normal loss estimated. The accountant identifies an abnormal gain. Which of the following correctly states the accounting treatment of abnormal loss and abnormal gain?

Q: Answer-In a process costing system, actual loss was lower than the normal loss estimated. The accountant id...

Abnormal Loss is unexpectedavoidable loss. It is not part of normal production and therefore should not increase product cost. It is therefore debited to Costing PL Ac. Abnormal Gain occurs when actual loss normal loss. This is extra good units produced. It is credited to Costing PL Ac Note Normal loss is absorbed in process cost directly. If there is any earnings from normal loss like normal loss units can be sold as scrap, the scrap value income will be deducted from process cost