[sandy]

Simm Co has determined its Dec 31 Inventory on a FIFO basis to be $400,000. Information pertaining to the inventory follows:

Estimated Selling Price $408,000

Estimated cost of disposal $20,000

Normal Profit Margin $60,000

Current replacement cost $360,000

Simm records losses that results from applying the lower of cost or market value. At Dec 31, what should be the amount of Simm’s inventory?

A 400,000

B 388,000

C 360,000

D 328,000

Correct answer C $360,000

I am not sure how they got the answer has C. It is one of the released questions, so there was no explanation.

Thanks