Teel Distribution Co Teel Records Losses That Result from Applying the Lower-Of-Cost-Or-Market Rule

Multiple Choice

Teel Distribution Co.has determined its December 31, 2007 inventory on a FIFO basis at $250,000.Information pertaining to that inventory follows: $$\begin{array} { l r } \text { Estimated selling price } & \$ 255,000 \\\text { Estimated cost of disposal } & 10,000 \\\text { Normal profit margin } & 30,000 \\\text { Current replacement cost } & 225,000\end{array}$$ Teel records losses that result from applying the lower-of-cost-or-market rule.At December 31, 2007, the loss that Teel should recognize is

A) $0.
B) $5,000.
C) $20,000.
D) $25,000.