An Inventory Loss from Market Decline of $1,600,000 Occurred in May

question 27

Short Answer

An inventory loss from market decline of $1,600,000 occurred in May 2011, after its March 31, 2011 quarterly report was issued.None of this loss was recovered by the end of the year.How should this loss be reflected in the company's quarterly income statements?


Additional information:
There are no preferred dividends in arrears, the balances in the Accounts Receivable and Inventory accounts are unchanged from January 1, 2011, and there were no changes in the Bonds Payable, share capital-Preference or ordinary accounts during 2011.Assume that preferred dividends for the current year have not been declared.