A company has inventory with a selling price of $451,000, a market value of $223,000 and a cost of $241,000. According to the lower of cost or market, the inventory should be written down to
$223,000.

Question

Quizplus · Accepted Answer

According to the lower of cost or market rule, inventory should be written down to the lower of its original cost or its market value. In this case, the market value is $223,000, which is lower than the cost of $241,000, so the inventory should be written down to $223,000. Therefore, the statement is true.

A Company Has Inventory with a Selling Price of $451,000