The journal entry to write down inventory to its market value results in a loss on the income statement.

Question

Quizplus · Accepted Answer

Writing down inventory to its market value means recognizing a decrease in the value of the inventory on hand, which results in a loss on the income statement. This is because the cost of goods sold will increase to reflect the lower value of the inventory, which reduces gross profit and ultimately net income.

The Journal Entry to Write Down Inventory to Its Market