Lower of Cost or Market and Interim Financial Statements – The following values were obtained from the inventory records of the Robb Company, which has a fiscal year ending on December 31:
Inventory, January 1, 2007
Inventory, March 31, 2007
1. Under what conditions does the company ignore the decline in inventory value below cost in its interim financial statements?
2. Assuming that the company records the market value, what is the journal entry to record the decline if the company uses the perpetual inventory system and the allowance method?