4. The reported LIFO cost of inventory is $250,000. I. Inventoryshould be valued at net realizable valued under forced sale. LIFOinventory values are lower than current market prices in a normalinflationary market. THe revaluation of inventory in this case mayresult in an increase in inventory values rather than a decrease.Although such an increase would normally not be recorded before asale validated the market valuie, the increase could be recordedearlier if evidence of a higher market value was strong. II.Inventory should be valued at expected liquidation value underforced sale. LIFO inventory values are lower than current marketprices in a normal inflationary market. The revaluation ofinventory in this case may result in an increase in inventoryvalues rather than a decrease. Although such an increase wouldnormally not be recorded before a sale validated the market value,the increase could be recorded earlier if evidence of a highermarket value was strong. III. Inventory should be valued atexpected liquidation valued under forced sale. LIFO inventoryvalues are higher than current market prices in a normalinflationary market. The revaluation of inventory in this case mayresult in an increase in inventory values rather than a decrease.Although such an increase would normally not be recorded before asale validated the market value, the increase could be recordedearlier if evidence of a higher market value was strong. IV.Inventory should be valued at expected liquidation value underforced sale. FIFO inventory values are lower than current marketprices in a normal inflationary market. The revlaution of inventoryin this case may result in a decrease in inventory values rahterthan an increase. Although such a decrease would normally not berecorded before a sale validated the market value, the decreasecould be recorded earlier if evidence of a lower market value wasstrong. 5. Investments in a subsidiary company are recorded atinitial cost plus undistributed profits. I. Investments in othercompanies would be valued at fair value if fair value can bedetermined. II. Investments in other companies would be valued atnet realizable value. III. Investments in other companies would bevalued at expected liquidation value. IV. Investments in othercompanies would be valued at market value.
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