The following information pertains to inventory held by a company at December 31, 2011. What amount of inventory should be reported under U.S. GAAP?

Question

The following information pertains to inventory held by a company at December 31, 2011.  What amount of inventory should be reported under U.S. GAAP?

Quizplus · Accepted Answer

According to U.S. GAAP, inventory should be reported at the lower of cost or market value. In this case, the cost of inventory is $20,000 (given in the table), and the market value is also $20,000 (since the replacement cost and net realizable value are both lower than the original cost). Therefore, the inventory should be reported at $20,000.

The Following Information Pertains to Inventory Held by a Company