ABC Corporation sells just one product. At the end of fiscal year 2017, ABC applies the lower-of-cost-or market (LCM) rule and writes down the value of inventory from historical cost of $10,000 to current market value of $9,700. Which of the following will result from this write-down? O a. ABC's owners' equity decreases by $300. O b. ABC's total assets decrease by $300. O C. ABC's gross profit remains the same. O d. Both a and b are true.

ABC Corporation sells just one product. At the end of fiscal year 2017, ABC applies the lower-of-cost-or market (LCM) rule and writes down the value of inventory from historical cost of $10,000 to current market value of $9,700. Which of the following will result from this write-down? O a. ABC's owners' equity decreases by $300. O b. ABC's total assets decrease by $300. O C. ABC's gross profit remains the same. O d. Both a and b are true.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.15E

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