Which of the following statements best describe an issue related to inventory?
A) Impairment testing based on most likely sale or disposal price.
B) Subject to allowance for noncollectibility.
C) Lower of cost or market impairments, including an allowance for obsolescence.
D) Subject to estimates made regarding the expected life of the assets and the appropriateness of the depreciation method.

Question

Quizplus · Accepted Answer

The statement "Lower of cost or market impairments, including an allowance for obsolescence" best describes an issue related to inventory. This is because inventory is subject to a valuation method called lower of cost or market, which basically means that if the market value of inventory falls below its cost, the inventory is written down to the lower market value. This can result in an impairment expense and an allowance for obsolescence may also be necessary if the inventory is at risk of becoming outdated or unsaleable.

Which of the Following Statements Best Describe an Issue Related