On December 31, 2014, Cruise Company Has 10,000 Units of an Inventory

question 33

Multiple Choice

On December 31, 2014, Cruise Company has 10,000 units of an inventory item, which cost $40 per unit when purchased on June 15, 2014. The selling price was $60 per unit. On December 30, 2014, the replacement cost was $36 per unit. At what amount should the 10,000 units of inventory be reported at on the December 31, 2014 balance sheet?

• A) $200,000.
• B) $240,000.
• C)$360,000.
• D)$400,000.

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Definitions:

Fair Value Enterprise Method

A valuation approach that estimates the value of an entire enterprise based on the fair value of its assets and liabilities.

Equity Method

An accounting technique used by companies to record their investments in other companies, based on the equity or ownership stake in those companies.

Amortization

The process of gradually writing off the initial cost of an asset over its useful life, applicable to intangible assets.

Acquisition Differential

The gap between what is paid to buy a company and the net worth of its recognizable assets and debts.