Which of the following amounts would be reported for Inventory on the balance sheet if the purchase cost of an item is $85, the current selling price is $79 and the costs of marketing the product is $4?

Question

Quizplus · Accepted Answer

According to the lower of cost or market rule, inventory should be reported at the lower of its cost or market value. The market value here is the selling price minus marketing costs, which is $79 - $4 = $75. Since $75 is lower than the purchase cost of $85, the inventory should be reported at $75.

Which of the Following Amounts Would Be Reported for Inventory