At the End of the Year 2 Accounting Period, DeYoung

Multiple Choice

At the end of the Year 2 accounting period, DeYoung Company determined that the market value of its inventory was $79,800. The historical cost of this inventory was $81,400. DeFazio uses the perpetual inventory method. Assuming the amount is immaterial, how will the necessary write-down to reduce the inventory to the lower-of-cost-or-market affect the company's financial statements?

A) Decrease total assets and gross margin
B) Decrease total assets and net income
C) Increase total assets and net income
D) Decrease total assets, gross margin, and net income