The Following Inventory Information Was Taken from the Records of Kleinfeld

question 19

Multiple Choice

The following inventory information was taken from the records of Kleinfeld Inc.: 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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Definitions:

Depreciation Expense

The allocated amount of the cost of a tangible or physical asset over its useful life, reflecting the asset’s consumption, wear and tear, or obsolescence.

Benefit The Company

Actions or strategies that enhance the performance, profitability, or competitive advantage of a company.

Cost of Equipment

The original value of equipment, including purchase price and any other expenses required to get the equipment ready for its intended use.

Expensed

Expensed is the recognition of a cost as an expense on the income statement in the period in which it is incurred, rather than capitalizing it as part of an asset.