Final answer:
The statement is false; depreciation on manufacturing assets is a product cost, included in cost of goods sold when inventory is sold, while period costs are expensed when incurred. In financial reporting, pricing controls and anti-dumping actions add complexity to determining true production costs.
Step-by-step explanation:
The statement that depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company is false. For manufacturing companies, depreciation of factory equipment and facilities is typically classified as a product cost, rather than a period cost. Product costs are those that are directly associated with the manufacture of products and are included in the cost of goods sold when the inventory is sold.
Period costs, on the other hand, are non-manufacturing expenses that are expensed in the accounting period they are incurred. Therefore, depreciation on office equipment or buildings used for administrative purposes would be considered a period cost, but not the depreciation of manufacturing-related assets.
In external financial reporting, determining the true cost of production can be complex. When it comes to price-controlled environments like China, calculating the cost of production can be highly challenging due to government interventions in pricing, tariffs, and potential anti-dumping actions. Anti-dumping cases and price controls can indeed affect the measurement of costs and may serve as tactics for regulating the balance of trade.