Inventory should be reported as follows except a. according to the chosen cost flow assumption. b. at lower of cost or market. c. as a long-term asset on the balance sheet. d. as a current asset on the balance sheet.

Question

Business

Zara Watson

27 August, 21:54

Inventory should be reported as follows except a. according to the chosen cost flow assumption. b. at lower of cost or market. c. as a long-term asset on the balance sheet. d. as a current asset on the balance sheet.

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Alice Harmon · Answer 1

c. as a long-term asset on the balance sheet.

Explanation:

The inventory has come under the current asset as it is converted into cash within one year. Like other current assets i. e account receivable, prepaid insurance, etc contains high liquidity and they get converted into cash in less than one year

It also recorded at cost or market value whichever is lower plus it also chosen as cost flow consumption but it is not reported as a long term asset as it is classified as a current asset, not the long term asset