The Original Cost of an Inventory Item Is Above the Replacement

question 97

Multiple Choice

The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable value less the normal profit margin. As a result, under the lower-of-cost-or-market method, the inventory item should be reported at the

• A) net realizable value.
• B) net realizable value less the normal profit margin.
• C) replacement cost.
• D) original cost.

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Definitions:

Sustainability

The practice of maintaining processes or systems in a way that doesn't deplete the natural resources or harm the environment for future generations.

Environmentally Conscious

Awareness and consideration of environmental impacts in decision making, often involving efforts to reduce negative effects on the environment.

Supply Chain Performance

An evaluation of how effectively and efficiently a supply chain meets its objectives, often measured by metrics such as delivery time, quality, and cost.

Direct Emissions

Emissions of greenhouse gases from sources that are directly owned or controlled by an entity.