Waltham Distribution Company has determined its December 31, 2020, inventory on a LIFO basis at $200,000. Information pertaining to that inventory follows. Estimated selling price $208,000
Estimated cost of disposal 10,000
Normal profit margin 6,000
Current replacement cost 190,000

Waltham Distribution records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2012, the loss that Ryan should recognize (Under US GAAP) is:

$10,000

Explanation

Calculation for Waltham Distribution should records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2012, the loss that Ryan should recognize (Under US GAAP) is

Using this formula

lower-of-cost-or-market rule Loss=Inventory- Current replacement cost

Let plug in the formula

lower-of-cost-or-market rule Loss= $200,000 – $190,000

lower-of-cost-or-market rule Loss= $10,000

Therefore Waltham Distribution should records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2012, the loss that Ryan should recognize (Under US GAAP) is $10,000

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.