Question 1:Kahn Co., in applying the lower of cost or market method, reports its inventory at replacement cost. Which of the following statements are correct?The original cost isgreaterthan replacement cost The net realizable value, less anormal proft margin, is greaterthan replacement cost es eses !o!o es!o !o"nder #C$, the market value of inventory is the middle of three %gures &in amount': replacement cost net reali(a)le value net reali(a)le value less normal pro%t margin.*f the middle %gure &market' is less than cost, then the inventory is reported at market. +he inventory in this ,uestion is reported at replacement cost, which meansthat replacement cost is market value and replacement cost is less than cost. -lso, replacement cost is the middle of the three %gures &or tied with one of the other two'.!et reali(a)le value less normal pro%t margin could not e.ceed replacement cost )ecause that would imply that replacement cost is the lowest of the three %gures, which contradicts the fact that replacement cost is market value.+herefore, in terms of the ,uestion, &1' original cost is greater than replacement cost, and &/' net reali(a)le value less normal pro%t margin is not greater than replacement cost.Question /:*nformation for a %rm using the dollar value &01' #*23 retail method follows. +he cost to retail &C45' is provided along with price level indices. +he data re6ects the use of the method through year one. 5etail5etail01 #*23#ayer7ase*nde.CurrentC45Cost7ase8/991.99 8/99.:98;9year one;9 1.19 8;;./>. *nterest capitali(ed B &.9>/>'81>?,999 B 8;,1K9. Question ;:+he following two inventory items were purchased as a group in a li,uidation sale for 81,999. 5eplacementCarrying 1alue*temCost3n IellerGs 7ooks- 8:99 8>+he %rm purchasing the inventory records item - at what amount?8