Since the value of the byproducts is usually insignificant, the accounting for the byproducts can vary. Here are two of several methods of accounting for byproducts:
- The byproducts could be valued at the split-off point at their net realizable value. This amount reduces the common costs which will be allocated to the joint products at the split-off point.
- None of the common costs is assigned to the byproducts. As a result the full amount of the common costs are allocated to the joint products at the split-off point. When the byproducts are sold, the amount received is reported as revenues.
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