When inventory is written down to market, this new basis is considered to be the cost basis for future periods.

Name: When inventory is written down to market, this new basis is considered to be the cost basis for future periods.
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Question

Quizplus · Accepted Answer

When inventory is written down to market value, the new, lower value becomes its cost basis for future accounting periods, and this adjusted basis is used for calculating cost of goods sold or any further write-downs, but not for subsequent write-ups.

When Inventory Is Written Down to Market, This New Basis