Use the following information: $$\begin{array} { | l | r | }
\hline & { \text { Cost } } \
\hline \text { Materials } & \$ 150,000 \
\hline \text { Costs to process into finished product } & 100,000 \
\hline
\end{array}$$ If the market price at year end is $210,000, what is the write down required?
A)$0
B)$40,000
C)$210,000
D)$250,000

Question

Use the following information: $$\begin{array} { | l | r | } 
\hline & { \text { Cost } } \
\hline \text { Materials } & \$ 150,000 \
\hline \text { Costs to process into finished product } & 100,000 \
\hline
\end{array}$$ If the market price at year end is $210,000, what is the write down required?
A)$0
B)$40,000
C)$210,000
D)$250,000

Quizplus · Accepted Answer

The write down required is the difference between the cost ($250,000) and the market price ($210,000), which is $40,000. Therefore, the best choice is B. Choice A is incorrect because there is a write down required. Choice C is incorrect because the full market price cannot be realized, and the company must account for this in the financial statements. Choice D is incorrect because it is not the difference between the cost and the market price.

Use the Following Information If the Market Price at Year End Is $210,000, What