By-product
A by-product is a relatively incidental or low-value output obtained alongside a main product in a joint process. Its value and significance, not simply whether it was planned, distinguish it from a joint product. A common treatment credits its net realisable value against the process cost of the main output, following the method specified. Include any costs needed to complete or sell it when finding that net amount.
Worked example
A process costs $10,000 and produces a main output plus scrap-like by-product saleable for $800 with $100 selling costs. Crediting $700 leaves $9,300 assigned to the main output on this method.
Common mistake
Do not deduct gross by-product revenue when additional completion or selling costs are necessary.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |