When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?
A) Sales price
B) Net realizable value
C) Historical cost
D) Net realizable value reduced by a normal profit margin

Question

Quizplus · Accepted Answer

When inventory declines in value below its original cost and the decline is other than temporary, it is valued at the net realizable value, which is the estimated selling price in the ordinary course of business minus any costs of completion, disposal, and transportation.

When Inventory Declines in Value Below Original (Historical) Cost, and This