During the First Quarter, a Company's Application of Lower of Cost

question 42

Multiple Choice

During the first quarter, a company's application of lower of cost or market methods indicated a $150,000 loss from a temporary market decline, which is expected to be restored in the fiscal year.During the second quarter, the market reversed the decline.Which of the following situations indicates a proper treatment of these facts?

• A)​A $37,500 loss recognized in the first quarter and no recovery recognized in the second quarter.
• B)​A $150,000 loss recognized in the first quarter and a $90,000 recovery in the second quarter.
• C)​A $150,000 loss recognized in the first quarter and a $50,000 recovery in the second quarter.
• D)​No loss recognized in the first quarter and no recovery recognized in the second quarter.

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Definitions:

Frozen Orange Juice

A product made by reducing freshly squeezed orange juice to a frozen concentrate, which can be reconstituted with water for consumption.

Higher Next Month

An anticipation or prediction that a particular metric or value, such as price or interest rate, will increase in the next month.

Market This Month

A snapshot or overview of market activities, trends, and performances for the current month.