If a Company Is Using the Lower-Of-Cost-Or-Market Rule and a Write-Down

question 132

Multiple Choice

If a company is using the lower-of-cost-or-market rule and a write-down is required, how will that write-down affect the company's financial statements?

• A)Net income will increase.
• B)Gross margin will decrease.
• C)Total assets will decrease.
• D)Net income and total assets will both decrease.

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Definitions:

Span Of Time

Span of time refers to the duration or length of a period between two points in time.

Poisson Distribution

A probability distribution that expresses the probability of a given number of events happening in a fixed interval of time or space, assuming these events happen with a known constant rate and independently of the time since the last event.

Probability Of Occurrence

The likelihood of an event happening, measured on a scale from 0 (impossibility) to 1 (certainty).

Span Of Time

The duration or extent between two points in time.