If the Cost of an Item of Inventory Is $80

question 52

Multiple Choice

If the cost of an item of inventory is $80 and the current selling price is $75, the amount shown in inventory on the balance sheet under the lower-of-cost-and-net realizable-value rule is:

• A)$75.
• B)$80.
• C)$155.
• D)$75 or $80.

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Definitions:

Section 1250

Section 1250 of the U.S. Internal Revenue Code deals with the tax treatment of gains from the sale of depreciable real property, distinguishing between ordinary income and capital gains.

Short-term Loss

A financial loss realized on the sale or exchange of an asset held for one year or less.

Accumulated Straight-line Depreciation

The total amount of depreciation expense that has been recorded for an asset to date, using the straight-line method of depreciation.

Tax Bracket

A range of incomes taxed at a particular rate under a progressive tax system.