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Problem 1: Based on a physical inventory taken on December 31,2020, Chewy Co. determined its chocolate inventory on a FIFO basis at P26,000 with a replacement cost of P20,000. Chewy estimated that, after further processing costs of P12,000, the chocolate could be sold as finished candy bars for P40,000. Chewy's normal profit margin is 10% of sales. Under the lower of cost or NRV, what amount should Chewy report as chocolate inventory in its December 31, 2020 Statement of Financial Position?
Option 1: 28,000Option 2: 26,000Option 3: 24,000Option 4: 20,000
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