A company's cost of inventory was $317,500. Due to phenomenal demand the market value of its inventory increased to $323,000. This company should write up the value of its inventory according to the consistency principle.

Question

Quizplus · Accepted Answer

The consistency principle requires that companies use the same accounting methods over time. Inventory is typically recorded at the lower of cost or market value, and increases in market value do not justify writing up inventory.

A Company's Cost of Inventory Was $317,500