the company has 1,000 of each of the following items in its inventory: cost per item market value per item jeans $20 $21 t-shirts $4 $3 what is the amount of the lower-of-cost-or-market write down, if any? multiple choice question.

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26-10-2022
Business

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the company has 1,000 of each of the following items in its inventory: cost per item market value per item jeans $20 $21 t-shirts $4 $3 what is the amount of the lower-of-cost-or-market write down, if any? multiple choice question.

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Qwclear Qwclear · Answer 1 · 2022-10-29T03:56:47-04:00

The market write down or lower-of-cost will be equal to $1000.

The lower-of-cost may be defined as the component of balance sheet of a company which is used wile valuing the inventory of the company. On the balance sheet it is recorded as the column of historical cost or the market value. Historical cost may be defined as the cost at which the inventory of the company was purchased. Since the value of the goods can change over time so the historical cost may also change. According to the question since the cost per item of the jeans and market value gains a profit of $1 so write down does not apply on this item.

On t-shirt since cost per item is $4 and market value is $3 dollar then write down will be

$4 - $3 = $1 and since there are 1000 items then

Write down = $1×1000 = $1000.

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