Question

n applying the lower of cost or market rule, the inventory of rehab equipment would be valued at: A) $315. B) $247. C) $150. D) $235.

Answer 1

D) $235.

Step-by-step explanation:

As we know that the inventory should be valued at cost or market value whichever is lower

In the given case

Selling price = $340

Net realizable value is

= Selling price - cost of sell

= $340 - $25

= $315

Replacement cost is $235

Cost = $250

As we can see that the replacement cost is less than the cost so the replacement cost should be valued i.e $235