Ask Question
BusinessBusiness
6 April, 03:01

SRB Company had an inventory loss from a market price decline that occurred in the first quarter. The loss was not expected to be restored in the fiscal year. However, in the third quarter, the inventory had a market price recovery that exceeded the first-quarter decline. For interim financial reporting, the dollar amount of net inventory should? a. Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the market price recovery. b. Not be affected in either the first quarter or the third quarter. c. Not be affected in the first quarter and increase in the third quarter by the amount of the market price recovery that exceeded the amount of the market price decline. d. Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter.

+3
Answers (1)
  1. 6 April, 03:02
    0
    d. Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter.

    Explanation:

    There is a standard rule to record the inventory that states that all the inventory shall be valued and recorded at cost or net realizable value whichever is less.

    Accordingly when there is decrease in the price level, in first quarter, goods will be valued at lower value that is market value, as assumed it is lower than cost.

    In the third quarter when the market value is high then the value on which the inventory shall be recorded is cost, because in comparison to cost or market value, cost is less.

    Ultimately statement d is correct.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “SRB Company had an inventory loss from a market price decline that occurred in the first quarter. The loss was not expected to be restored ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
The term consideration refers to the regard that contracting parties hold for each other. True or False
Answers (1)
Suppose that people in your community voted to eliminate all local taxes. which of these goods and services would most likely disappear?
Answers (1)
What process involves identifying and controlling the functional and physical design characteristics of products and their support documentation, and ensures that the descriptions of the project's products are correct and complete?
Answers (1)
This year, Lambert Company will ship 1,500,000 pounds of goods to customers at a cost of $1,200,000. If a customer orders 10,000 pounds and produces $200,000 of revenue (total revenue is $20 million), the amount of shipping cost assigned to the
Answers (1)
Which of these expressions should an american businessperson avoid in a meeting with foreign business representatives?
Answers (1)
New Questions in Business
FetchFun Inc. is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. FetchFun Inc. plans to announce that it will borrow $50 million and use the proceeds to repurchase shares. FetchFun Inc.
Answers (1)
Which of the following is not one of the categories of which the CPI market basket consists? a. housing b. food c. education d. industry
Answers (1)
Individuals are free to produce and sell whatever products they wish
Answers (1)
If inflation begins to rise rapidly, which step is the Federal Reserve likely to take?
Answers (1)
April Stigum will receive a 6 year annuity of $2,000 per year, beginning 7 years from today. In other words, the first payment will be made at the end of year 7.
Answers (1)
Home » Business » SRB Company had an inventory loss from a market price decline that occurred in the first quarter. The loss was not expected to be restored in the fiscal year.
Sign Up Forgot Password?