The Following Information Pertains to Inventory Held by a Company

question 24

Multiple Choice

The following information pertains to inventory held by a company on December 31, 2011. $$\begin{array} { l r } \text { Historical cost } & \$ 30,000 \\\text { Replacement cost } & \$ 20,000 \\\text { Net realizable value } & \$ 27,000 \\\text { Normal profit margin } & 20 \%\end{array}$$
-What is the amount of inventory loss shown on the income statement under IFRS?

• A) $0.
• B) $3,000.
• C) $14,000.
• D) $10,000.
• E) $8,400. The amount of loss is the writedown of inventory from $30,000 to $27,000 or $3,000.

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Definitions:

Substantial

Something of considerable importance, size, or worth.

Segmentation

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors, which might require separate products or marketing strategies.

Targeting

The process used by businesses to focus their marketing efforts on a specific audience or market segment.

Positioning

A marketing strategy that aims to establish a brand or product in the mind of consumers, distinguishing it from competitors.