Joe Crede Corporation sells its product, a rare metal, in a controlled market with a quoted price applicable to all quantities.The total cost of 5,000 pounds of the metal now held in inventory is $250,000.The total selling price is $600,000, and estimated costs of disposal are $10,000.At what amount should the inventory of 5,000 pounds be reported in the balance sheet?
A)$240,000.
B)$250,000.
C)$590,000.
D)$600,000.

Question

Quizplus · Accepted Answer

The inventory should be reported at the lower of cost or net realizable value (NRV). The NRV is the selling price ($600,000) minus the costs of disposal ($10,000), which equals $590,000. Since the cost ($250,000) is lower than the NRV ($590,000), the inventory should be reported at cost, which is $250,000.

Joe Crede Corporation Sells Its Product, a Rare Metal, in a Controlled