Gannon, Inc. applies the lower-of-cost-or-market rule to its inventory in aggregate. At the end of the accounting period, it is determined that the cost of the inventory is $25,985 and the market (replacement) value is $24,886. If an adjustment is necessary, what is its effect on the financial statements?

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The Answer of Gannon, Inc. applies the lower-of-cost-or-market rule to its inventory in aggregate. At the end of the accounting period, it is determined that the cost of the inventory is $25,985 and the market (replacement) value is $24,886. If an adjustment is necessary, what is its effect on the financial statements?