5. Company A sells item X. Item X had a book value of $2,500. The replacement cost was $2,100. Item X has a selling price of $2,800. Additional shipping costs were $90. The normal profit margin was $750. Assuming the company uses the lower-of-cost-or-market to value its inventory, what should the amount of write-down be?

$540

$400

$0

$450

6. Company B signed a contract to be executed in 2022 at a price of $100,000. The market price of the inventory decreased to $90,000 at the end of 2020. How much gain or loss should the company record on its books?

No entry needed

$10,000 unrealized holding gain, which affects the balance sheet

$10,000 unrealized holding loss, which affects the income statement

$10,000 unrealized holding loss, which affects other comprehensive income