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Suppose that a Home Depot has $ 2 , 0 0 0 , 0 0 0 worth of lumber in inventory. Lumber prices drop and
Suppose that a Home Depot has $ worth of lumber in inventory. Lumber prices drop and based on the current price of lumber futures on the CME, the inventory is now worth $
Which of the following will occur?
A This decline in inventory fair value is recognized immediately on the statement of cash flows but not on the income statement or balance sheet until a transaction occurs.
B This decline in inventory fair value is recognized immediately on the income statement but not on the balance sheet until a transaction occurs.
C This decline in inventory fair value is recognized immediately on the balance sheet but not on the income statement until a transaction occurs..
D This decline in inventory fair value is recognized immediately on both the balance sheet and the income statement.
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