If the cost of an item of inventory is $80 and the current selling price is $75, the amount shown in inventory on the balance sheet under the lower-of-cost-and-net realizable-value rule is:

Question

Quizplus · Accepted Answer

Under the lower-of-cost-and-net realizable-value rule, inventory is reported on the balance sheet at the lower of its historical cost ($80) or its net realizable value ($75). Since $75 is lower than $80, the inventory would be reported at $75.

If the Cost of an Item of Inventory Is $80