EFG Co. has 600 units in inventory that had been purchased for $22 each and that would currently cost $25 to replace. The supplier has just informed EFG Co. that the cost of these goods is rising to $28.50. A. EFG Co. should adjust the inventory account using the most relevant market values, which is $28.50. B. EFG Co. should make no adjustments to the inventory account C. EFG Co. should adjust the inventory account using the lower of the recent market values, which is $25. D. EFG Co. should adjust the inventory account using the average cost and market values, which is $25.17.

EFG Co. has 600 units in inventory that had been purchased for $22 each and that would currently cost $25 to replace. The supplier has just informed EFG Co. that the cost of these goods is rising to $28.50. A. EFG Co. should adjust the inventory account using the most relevant market values, which is $28.50. B. EFG Co. should make no adjustments to the inventory account C. EFG Co. should adjust the inventory account using the lower of the recent market values, which is $25. D. EFG Co. should adjust the inventory account using the average cost and market values, which is $25.17.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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