Best Deals Inc.has six CD players in ending merchandise inventory on December 31.The players were purchased in November for $165.The price lists from suppliers indicate the current replacement cost of a CD player to be $162.What would be the amount reported as Inventory on the balance sheet?

Question

Quizplus · Accepted Answer

The inventory should be reported at the lower of cost or market. The cost is $165 per player, but the replacement cost is $162. Therefore, the inventory is valued at $162 per player. $162 x 6 = $972.