A Company Normally Sells Its Product for $40 Per Unit

question 170

Multiple Choice

A company normally sells its product for $40 per unit.However,the selling price has fallen to $30 per unit.This company's current inventory consists of 200 units purchased at $32 per unit.Replacement cost has now fallen to $26 per unit.Calculate the value of this company's inventory at the lower of cost or market.

• A)$5,200
• B)$6,400
• C)$6,000
• D)$8,000
• E)$7,000

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Definitions:

Entity-wide Disclosures

Refers to the disclosure of financial information by a business entity that pertains to its operations, financial condition, and performance, taking into account all divisions and geographic locations.

IFRS 8

A segment of International Financial Reporting Standards related to Operating Segments, requiring certain entities to disclose information about their operating segments, products and services, geographical areas, and major customers.

Impairment Loss

A reduction in the recoverable amount of a fixed asset or goodwill below its carrying amount, recognized in the financial statements.

Net Realizable Value

The estimated selling price of goods, minus estimated costs of completion and any costs necessary to make the sale.