The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable value less the normal profit margin. As a result, under the lower-of-cost-or-market method, the inventory item should be reported at the
A) net realizable value.
B) net realizable value less the normal profit margin.
C) replacement cost.
D) original cost.

Question

Quizplus · Accepted Answer

The Answer of The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable value less the normal profit margin. As a result, under the lower-of-cost-or-market method, the inventory item should be reported at the
A) net realizable value.
B) net realizable value less the normal profit margin.
C) replacement cost.
D) original cost.

The Original Cost of an Inventory Item Is Above the Replacement