Rowan Company Has Four Different Categories of Inventory

question 30

Multiple Choice

Rowan Company has four different categories of inventory.The quantity,cost,and market value for each of the inventory categories are as follows:

The company carries inventory at lower-of-cost-or-market applied to the entire stock of inventory in the aggregate.How would the implementation of the lower-of-cost-or-market rule impact the elements of the company's financial statements?

• A)Increase total assets and stockholders' equity by $55.50.
• B)Decrease total assets and stockholders' equity by $101.00.
• C)Decrease total assets and stockholders' equity by $79.00.
• D)Have no effect on total assets or stockholders' equity.

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Definitions:

Rivers Flow

The movement of water in a natural stream or river channel, often towards an ocean, sea, lake, or another river.

River Terraces

Flat, step-like landforms found alongside river valleys, formed by the river as it erodes downward into its bed.

Deltas

Landforms created at river mouths where sediment is deposited in a fan shape as the river flows into a slower-moving or standing body of water like an ocean or lake.

Sediments

Particles of rock, soil, or organic material deposited by water, wind, or ice, often forming layers in riverbeds, lakes, and oceans.