A company buys a piece of inventory for $80. Almost immediately, the market becomes flooded with these items and the replacement cost falls to $76.
A company buys a piece of inventory for $80. Almost immediately, the market becomes flooded with these
items and the replacement cost falls to $76. The company is trying to determine whether a loss must be recorded because of this drop. Despite the change, the company still believes that it can sell this piece of inventory for $90 but only after spending $15 in selling costs. The normal profit on this type of inventory transaction is $6. In applying lower of cost or market value to inventory, what will now be reported on the balance sheet for this inventory item?
a) $69
b) $75
c) $ 76
d) $ 80
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