A company's cost of inventory was $219,500. Due to phenomenal demand the market value of its inventory increased to $221,700. This company should write up the value of its inventory according to the conservatism constraint.

Question

Quizplus · Accepted Answer

The conservatism constraint in accounting dictates that inventory should not be written up to reflect market value increases; it should only be written down if the market value falls below cost.

A Company's Cost of Inventory Was $219,500