Question

Inventory may properly be stated above cost

A. When its market value or its net realizable value exceeds its cost.
B. When cost is determined under the first-in, first-out method.
C. When cost is determined under the last-in, first-out method.
D. Only in exceptional cases.

Answer 1

Explanation: Only in exceptional cases may inventories be stated above cost according to the Accounting Standards Codification. For instance, precious metals, which have a fixed monetary value with no substantial cost of marketing may be stated at its monetary value, which may be above cost; For agricultural, mineral, and other products that can be substituted for one another and have immediate marketability at quoted prices, it may be difficult to obtain appropriate costs leading to inventory being stated above costs.