Applying LCM, NeCo determines that as of December 31, 20xa chandise that origina

Question

Applying LCM, NeCo determines that as of December 31, 20xa chandise that originally cost $46,300 is now $43,500 at market. 20X3, mer 47. NeCo determines that the loss is not material enough to warrant fore it should a. make no entry but disclose the loss in a note on the financial statements make no entry and make no disclosure. make an entry to reduce retained earnings. d. make an entry to increase cost of goods sold. Early in 20X4, the market value of NeCo's inventory unexpectedly increases to $47,500. If the original cred to the Inventory account, NeCo should 48. it to write-down inventory was a. recognize a $4,000 gain. b. recognize a $2,800 gain. c. make no entry but disclose the loss in a note accompanying the fi- nancial statements. d. make no entry and make no disclosure.

Explanation / Answer

47 C - make an entry to reduce retained earnings - because inventory has to be value as pewr cost or market value whicever is lower , hence it co will adopt market value then retained aernings will be reduce 48 B -- Gain of 2800 if earlier inventory valued at 43500 ealrier

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