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Describes the correct effect of the write-down

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Problem 1: Upsilon Company must write down its inventory from its cost of $260,000 to its net realizable value of $248,000 on December 31, 2019. The inventory will all be sold in the year 2020. Which of the following describes the correct effect of the write-down?

A) The 2019 gross profit decreases by $12,000
B) The 2020 cost of goods sold increases by $12,000
C) The 2020 ending inventory increases by $12,000
D) The 2020 gross profit is not affected if the inventory is sold during 2020.

Reference no: EM132660638

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