Rowan Company has four different categories of inventory. The quantity, cost, and market value for each of the inventory categories are as follows: The company carries inventory at lower-of-cost-or-market applied to the entire stock of inventory in the aggregate. How would the implementation of the lower-of-cost-or-market rule impact the elements of the company's financial statements?
A)Increase total assets and stockholders' equity by $55.50.
B)Decrease total assets and stockholders' equity by $101.00.
C)Decrease total assets and stockholders' equity by $79.00.
D)Have no effect on total assets or stockholders' equity.

Question

Rowan Company has four different categories of inventory. The quantity, cost, and market value for each of the inventory categories are as follows:  The company carries inventory at lower-of-cost-or-market applied to the entire stock of inventory in the aggregate. How would the implementation of the lower-of-cost-or-market rule impact the elements of the company's financial statements?
A)Increase total assets and stockholders' equity by $55.50. 
B)Decrease total assets and stockholders' equity by $101.00. 
C)Decrease total assets and stockholders' equity by $79.00. 
D)Have no effect on total assets or stockholders' equity.

Quizplus · Accepted Answer

The Answer of Rowan Company has four different categories of inventory. The quantity, cost, and market value for each of the inventory categories are as follows:  The company carries inventory at lower-of-cost-or-market applied to the entire stock of inventory in the aggregate. How would the implementation of the lower-of-cost-or-market rule impact the elements of the company's financial statements?
A)Increase total assets and stockholders' equity by $55.50. 
B)Decrease total assets and stockholders' equity by $101.00. 
C)Decrease total assets and stockholders' equity by $79.00. 
D)Have no effect on total assets or stockholders' equity.

Rowan Company Has Four Different Categories of Inventory