An Inventory Loss from a Market Price Decline Occurred in the First

question 32

Multiple Choice

An inventory loss from a market price decline occurred in the first quarter. The loss was not expected to be restored in the fiscal year. However, in the third quarter the inventory had a market price recovery that exceeded the market decline that occurred in the first quarter. For interim reporting, the dollar amount of net inventory should:

• A) decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the market price recovery.
• B) decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter.
• C) not be affected in the first quarter and increase in the third quarter by the amount of the market price recovery that exceeded the amount of the market price decline.
• D) not be affected in either the first quarter or the third quarter.

---

Definitions:

Canada

A country located in the northern part of North America, known for its vast landscapes, multicultural diversity, and strong national healthcare system.

St.Lawrence River

A large river in North America, flowing from the Great Lakes to the Atlantic Ocean, and serving as a vital waterway for transportation and ecosystems.

Great Lakes

A group of five large, interconnected freshwater lakes located in North America, vital for transportation, water supply, and habitats.

Water

A clear, smell-free, flavorless fluid that constitutes the oceans, lakes, streams, and precipitation, and is foundational to the bodily fluids of living beings.