Which of the following amounts would be reported as Merchandise Inventory on the balance sheet of a company if the cost of an item is $120 and the current replacement cost is $80?

Question

Quizplus · Accepted Answer

Under the lower of cost or market rule, inventory is reported on the balance sheet at the lower of its historical cost or current replacement cost. In this case, the current replacement cost ($80) is lower than the historical cost ($120), so $80 would be reported.

Which of the Following Amounts Would Be Reported as Merchandise