at the end of a reporting period, a company determines that its ending inventory has a cost greater than its replacement cost (market). what would be the effect(s) of the adjustment to write down inventory to market?

When an inventory error is discovered, the income statement and balance sheet from the previous year must also be restated. Inventory balance was overstated; as a result, the income statement should reflect an increase in COGS,

Decrease total assets.

Increase total expenses.

Decrease retained earnings.

What is the effect of overstated ending inventory?

The amount of inventory that would otherwise have been charged to the cost of goods sold during the period is decreased when ending inventory is overstated. The cost of goods sold expense consequently decreases during the current reporting period.
When an inventory error is discovered, the income statement and balance sheet from the previous year must also be restated. Inventory balance was overstated; as a result, the income statement should reflect an increase in COGS, which will reduce net income. The balance sheet should also reflect a decrease in ending inventory and retained earnings.

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