Fundy Corp If Fundy Values Their Inventory at the Lower of Cost

question 84

Multiple Choice

Fundy Corp.has the following information about their inventory at year-end: $\begin{array}{lrr}\text { Item}&\text { Cost }&\text { NRV }\\\hline\# 1 & \$ 12,000 & \$ 12,500 \\\# 2 & 21,250 & 19,750 \\\# 3 & 18,600 & 18,500\end{array}$ If Fundy values their inventory at the lower of cost and net realizable value on an individual basis, what would be loss on inventory write down for the current year?

• A)$500
• B)$1,100
• C)$1,600
• D)The loss would not be recorded until the items are sold.

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Definitions:

Currency

The system of money in general use in a particular country or region, acting as a medium of exchange.

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified price on a future date.

Exchange Gain

The profit resulting from foreign exchange transactions and the fluctuation in exchange rates, realizing a higher value in the home currency.

Net Loss

The amount by which total expenses exceed total revenues for a business during a specific period, indicating a financial loss.