effect of inventory valuation on the balance sheet and net 239598

Effect of inventory valuation on the balance sheet and net income. ResellFast purchases residential and commercial real estate for resale. ResellFast has a December 31 year-end and prepares financial statements quarterly. On February 5, 2008, ResellFast acquired an open-air mall in Miami, Florida, with space for 15 retail businesses, for $20 million. On April 12, 2008, a storm flooded a portion of the mall, reducing the mall’s fair value to $16.5 million. On August 14, 2008, a large retailer announced plans to build a new store adjacent to the open-air mall: this announcement, combined with ResellFast’s repairs, attracted several smaller retailers to inquire about acquiring space in the open-air mall. By September 30, 2008, the fair value of the open-air mall had increased to $26 million. On November 8, 2008, ResellFast sold the mall for $27.5 million. Compute the carrying value of the open-air mall on ResellFast’s balance sheet and the related income statement effect for each quarter of 2008. ResellFast follows U.S. GAAP.

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