Recent developments have made much of a company's inventory obsolete. This obsolete inventory should be
A)Written down to zero or its scrap value
B)Shown in the Balance Sheet at its replacement cost
C)Shown in the Balance Sheet at cost, but classified as a non-current asset
D)Carried in the accounting records at cost until it is sold

Question

Quizplus · Accepted Answer

Obsolete inventory should be written down to zero or its scrap value to reflect its reduced worth accurately in the financial statements. This approach aligns with the principle of conservatism in accounting, ensuring that assets are not overstated on the balance sheet.

Recent Developments Have Made Much of a Company's Inventory Obsolete