The Following Information Pertains to Inventory Held by a Company

question 2

Multiple Choice

The following information pertains to inventory held by a company at December 31, 2011. $$\begin{array} { | l | r | } \hline \text { Historical cost } & \$ 25,000 \\\hline \text { Replacement cost } & \$ 20,000 \\\hline \text { Net realizable value } & \$ 21,000 \\\hline \text { Normal profit Margin } & 20 \% \\\hline\end{array}$$
-What amount of inventory should be reported under U.S. GAAP?

• A) $25,000.
• B) $21,000.
• C) $20,000.
• D) $16,800.
• E) $16,000. Under US GAAP The inventory is reported at the lower of cost or market where market is defined as replacement cost subject to ceiling and floor limitations.

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Definitions:

Platelets

Small blood cells that play a crucial role in clotting, helping to stop bleeding by clumping and forming plugs in blood vessel injuries.

Hemophilia

A genetic disorder that impairs the body's ability to make blood clots, leading to excessive bleeding.

Venipunctures

The act of puncturing a vein with a needle for the purpose of drawing blood or for intravenous injection.

Blood Transfusion

The process of transferring blood or blood components from one person (donor) into another person’s bloodstream (recipient).