The lower-of-cost-or-market rule for inventories may be applied to total inventory, to groups of similar items, or to each item. Which application generally results in the lowest inventory amount? a. All applications result in the same amount. b. Total inventory c. Groups of similar items d. Separately to each item Merry Co. purchased a machine costing $125,000 for its manufacturing operations and paid shipping costs of $20,000. Merry spent an additional $10,000 testing and preparing the machine for use. What amount should Merry record as the cost of the machine? a. $155,000 b. $145,000 c. $135,000 d. $125,000 A company is constructing an asset for its own use. Construction began in Year 3. The asset is being financed entirely with a specific new borrowing. Construction expenditures were made in Year 3 and Year 4 at the end of each quarter. The total amount of interest cost capitalized in Year 4 should be determined by applying the interest rate on the specific new borrowing to the a. b. c. d. total accumulated expenditures for the asset in Year 3 and Year 4. average accumulated expenditures for the asset in Year 3 and Year 4 average expenditures for the asset in Year 4. total expenditures for the asset in Year 4. On January 2, Year 1, Union Co. purchased a machine for $264,000 and depreciated it by the straight-line method using an estimated useful life of 8 years with no salvage value. On January 2, Year 4, Union determined that the machine had a useful life of 6 years from the date of acquisition and will have a salvage value of S24,000. An accounting change was made in Year 4 to reflect the additional data. The accumulated depreciation for this machine should have a balance at December 31, Year 4 of a. $179,000 b. $160,000 c. $154,000 d. $146,000