The Following Inventory Information Was Taken from the Records of Kleinfeld

question 45

Multiple Choice

The following inventory information was taken from the records of Kleinfeld Inc.: $\begin{array}{ll}\text { Historical cost } & \$ 12,000 \\\text { Replacement cost } & \$ 7,000 \\\text { Expected selling price } & \$ 9,000 \\\text { Expected selling cost } & \$ 500 \\\text { Normal profit margin } & 50 \% \text { of price }\end{array}$
-Assume that subsequent to your adjustment the expected selling price increases to $13,000.(All the rest of the facts are the same.) What adjustment to inventory should be made under IAS 2 after this event?

• A)Inventory should be increased (debited) by $3,500.
• B)Inventory should be increased (debited) by $4,000.
• C)No adjustment should be made to inventory once it is written down.
• D)Inventory should be increased (debited) by $1,000.

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