Diversified Inc. is a retailer that sells a variety of goods under three major business units. Its Home Appliances Division manufactures and sells home kitchen appliances such as refrigerators, microwave ovens and dishwashers. During his annual review of the companys financial condition, Diversifieds president notes that the companys inventory included a material reduction described as an allowance to reduce inventory to market. While the Home Appliances Division had received a considerable amount of negative publicity related to fires caused by defective switches in its products, the president felt that any reduction in the market value of these products that was taken in the third quarter was more than offset by the high margins the High Fashion Division. Therefore, the president felt that no write down should have been taken. Further, the president notes that the company had replaced the faulty switches in the third fiscal quarter and subsequent sales had shown that the market value of its appliances had partially recovered. All estimates are that the value of the appliance inventory should be completed recovered by the fourth quarter of the next fiscal year. Research the related generally accepted accounting principles and prepare a short memo to the accounting file not to exceed two pages that addresses the presidents concerns. Cite your references and applicable paragraph numbers.