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The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable value less the normal profit margin. As a result, under the lower-of-cost-or-market method, the inventory item should be reported at the _________.A. Original cost.
B. Replacement cost.
C. Net realizable value.
D. Net realizable value LESS normal profit margin

Respuesta :

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Answer:

D. Net realizable value LESS normal profit margin

Explanation:

Inventories are assets of an entity stocked for the purpose of production, or assets that is being sold in the ordinary course of business, or it can be supplies used in the process of production, it can be materials at some stages of production (work-in-process)

The International Accounting Standard 2 (IAS 2) states that "Inventories are measured at the lower of cost and net realizable value". when the retail technique is used in measuring Inventories, inventory cost is arrived at by deducting percentage gross margin from the selling price.

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