A company with a calendar year end uses the LIFO method to value inventory in its annual and interim financial statements. The company realizes a $10,000 loss due to declining inventory prices in the first quarter. The company expects the loss to be permanent. However, market prices increase by $3,000 in the second quarter and $5,000 in the third quarter. What amounts of loss and loss recovery, if any, should the company recognize in its interim financial statements for the first and third quarters?

First quarter

Third quarter

A.$0

$0

B.$10,000 loss

$0

C.$10,000 loss

$5,000 loss recovery

D.$10,000 loss

$8,000 loss recovery