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
the income would be overstated by $1,000, but the balance sheet would be correct
none of the options is correct
there would be no effect
the income statement would be correct, but the balance sheet would overstate assets by $1,000