Digger Co. has leased a mine from which it recently extracted 200 kilograms of gypsum (a mineral used in producing drywall). Digger Co. plans to sell the gypsum to building materials manufacturers. Digger Co. is analyzing whether its gypsum inventory can be carried at its selling price per ASC 330-10-35-16(b). Assume that quoted market prices are generally available for gypsum, and that the market for gypsum is active.

Required:

Using the standard memo format, analyze whether all necessary conditions are met for the accounting treatment proposed. If assumptions are needed to fully evaluate the guidance, identify those assumptions in your analysis. For this particular memo, you are not required to present alternative treatments; assume for this issue you have solely been asked to document whetherthe conditions in ASC 330-10-35-16(b) are met.