Question
Green Valley is a forestation company. Inventory of young trees as at December 31, 2019 was 10,000 seedlings, each of which had cost $0.10. Unfortunately,
Green Valley is a forestation company. Inventory of young trees as at December 31, 2019 was 10,000 seedlings, each of which had cost $0.10. Unfortunately, the seedlings would not last until the start of the 2020 planting season. If the cost of the closing inventory were to be used for the 2019 financial statements instead of the market value, _______________ | |
the income and assets would both be overstated by $1,000 because as per accounting constraint the inventory should be valued at zero |
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the income would be overstated by $1,000, but the balance sheet would be correct |
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none of the options is correct |
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there would be no effect |
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the income statement would be correct, but the balance sheet would overstate assets by $1,000 |
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