In October 2013, Harvest Moon Produce Entered into a Contract

question 88

Multiple Choice

In October 2013, Harvest Moon Produce entered into a contract with Boblaws Distribution to sell them 100,000 cases of oranges during the coming year.Harvest Moon grows their oranges on approximately 100 acres of prime land for orange trees.At the time of the contract, the fair value of oranges was $25 per case.The weather had been unusually warm and Harvest Moon expects to harvest approximately 130,000 cases.The additional 30,000 cases will have a selling cost of $2 per case.
Unfortunately, by the end of the year, the excess supply of oranges has driven the market price down to $20 per case.In their December 31 financial statements, Harvest Moon should value their agricultural inventory at:

• A)the amount of costs they have invested that year.
• B)$2,540,000
• C)$3,040,000
• D)$2,500,000

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