A unit of ending inventory has a cost of $100 per unit.The selling price per unit is $200.The replacement cost per unit is $90.What value is reported for this inventory on the balance sheet?
A) $90
B) $100
C) $110
D) $200

Question

Quizplus · Accepted Answer

Under the lower of cost or market rule, inventory is reported on the balance sheet at the lower of its historical cost or market value. In this case, the market value (replacement cost) of $90 is lower than the historical cost of $100, so the inventory is reported at $90.

A Unit of Ending Inventory Has a Cost of $100