Howard Company uses the perpetual inventory system. The company applies the lower-of-cost-or-market rule to the entire stock of inventory in the aggregate. At the end of the current year, the cost of the inventory was $19,456 and its current market value is $19,950. Indicate how the required adjusting entry affects the elements of the financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. Increase = I Decrease = D No Effect = NAAssetsLiabilitiesStk. EquityRevenuesExpensesNet IncomeStmt of Cash Flows???????
What will be an ideal response?
(NA) (NA) (NA) (NA) (NA) (NA) (NA)
Because the market value is higher than the inventory's cost, there is no adjustment necessary.
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a. True b. False
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