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General Electric Data for the year ended December 31, 2023: Item Amount Inventory Cost $8,000,000 Market Value of Inventory $7,200,000 Sales $40,000,000 Cost of Goods

General Electric Data for the year ended December 31, 2023:

Item

Amount

Inventory Cost

$8,000,000

Market Value of Inventory

$7,200,000

Sales

$40,000,000

Cost of Goods Sold

$24,000,000

Operating Expenses

$12,000,000

  1. Calculate the amount of inventory to be reported on the balance sheet.
  2. Determine the impact on net income due to the write-down of inventory.
  3. Discuss the impact of inventory write-down on General Electric’s operating income.
  4. Explain the application of the Conservatism Principle in inventory valuation.
  5. How should General Electric record the inventory write-down in its financial statements?

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