Abel company must write-down its inventory by $30,000 to the net realizable value of $450,000 at december 31, 2016. what is the effect of this writedown on the year 2016 financial statements? decrease accounts payable. decrease cost of goods sold. increase pretax income. decrease ending inventory on the balance sheet.

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Business

Saniyah Mejia

3 January, 20:20

Abel company must write-down its inventory by $30,000 to the net realizable value of $450,000 at december 31, 2016. what is the effect of this writedown on the year 2016 financial statements? decrease accounts payable. decrease cost of goods sold. increase pretax income. decrease ending inventory on the balance sheet.

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Daniella · Answer 1

decrease ending inventory on the balance sheet.

Explanation:

A write down is defined as the process of reducing the value of an asset in a business's books as a result of economic or fundamental changes in the asset.

Write down is done when a firm readjust their balance sheet usually in quarterly reports. It is the opposite of write up.

Abel company is writing down by $30,000 to a realisable value of $450,000. This will be represented in the balance sheet as a decrease in ending inventory. So as to reflect the new value of $450,000.