Inventory that originally cost $10,000 was written down to its net realizable value of $8,500 at the end of 2012. At the end of 2013, the net realizable value is determined to be $10,500. At what amount should the inventory be reported on the December 31, 2013 statement of ﬁnancial position?

Question

Quizplus · Accepted Answer

Under the lower of cost or market rule, once inventory is written down to its net realizable value, any subsequent recovery in value is not recognized until the inventory is actually sold. Therefore, the inventory should be reported at its cost, $10,000, as long as that cost is lower than the net realizable value at the end of 2013, which it is.

Inventory That Originally Cost $10,000 Was Written Down to Its