Ask Question
17 October, 15:21

Because of a decline in market price in the second quarter, Petal Co. incurred an inventory loss, but the market price was expected to return to previous levels by the end of the year. At the end of the year, the decline had not reversed. Petal accounts for its inventory using the LIFO method. When should the loss be reported in Petal's interim income statements?

+3
Answers (1)
  1. 17 October, 16:40
    0
    In the fourth quarter only.

    When the loss is probable and estimable, the expected loss must be recorded in full. This loss becomes such at the end of the fourth quarter. Therefore, the inventory must be valued on the year-end at the lower of cost or market, recognizing the loss at that time.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Because of a decline in market price in the second quarter, Petal Co. incurred an inventory loss, but the market price was expected to ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers