Question: Due to a decline in market price in the second quarter, Petal Co. incurred an inventory loss. The market price is expected to return to

Due to a decline in market price in the second quarter, Petal Co. incurred an inventory loss. The market price is expected to return to previous levels by the end of the year.

At the end of the year the decline had not reversed. When should the loss be reported in Petal’s interim income statements?

a. Ratably over the second, third, and fourth quarters.

b. Ratably over the third and fourth quarters.

c. In the second quarter only.

d. In the fourth quarter only.

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