Question
Rowan Company has four different categories of inventory. The quantity, cost, and market value for each of the inventory categories are as follows: Item Quantity
Rowan Company has four different categories of inventory. The quantity, cost, and market value for each of the inventory categories are as follows:
Item | Quantity | Cost Per Unit | Market Value Per Unit | ||||
1 | 220 | $ | 4.40 | $ | 4.60 | ||
2 | 130 | $ | 6.20 | $ | 6.00 | ||
3 | 100 | $ | 10.00 | $ | 9.25 | ||
4 | 25 | $ | 20.50 | $ | 25.00 | ||
The company carries inventory at lower-of-cost-or-market applied to the entire stock of inventory in the aggregate. How would the implementation of the lower-of-cost-or-market rule impact the elements of the companys financial statements?
Multiple Choice
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Increase total assets and stockholders equity by $55.50.
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Decrease total assets and stockholders equity by $101.00.
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Decrease total assets and stockholders equity by $79.00.
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Have no effect on total assets or stockholders equity.
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