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

Quizplus · Accepted Answer

Under U.S. GAAP, the inventory should be reported at the lower of cost or market value. The cost of inventory is $21,600 (10,000 + 4,500 + 4,100 + 3,000), and the market value is $20,000 (5,000 + 3,000 + 2,000 + 2,500 + 7,500). Therefore, the inventory should be reported at $20,000, which is the lower value.

The Following Information Pertains to Inventory Held by a Company