Question

The text is talking about the valuation of lower of cost ormarket (net realizable value).

It provides an example of "Intel chips" in being devalued in thefollowing way:

Intel Chips - [Qty] 1,000 [Cost per Item] $250 [Market Per Item]$200 [Lower of Cost or Market per item] $200 Total Lower of Cost orMarket 1,000 x $200 = $200,000

This part makes sense. The text then indicates that the followingeffects of the lower of cost or market write-down (of the $50,000dollars) are as follows:

Effects of LCM Write Down	Current Period	Next Period (if sold)
Costs of Goods Sold	Increase $50,000	Decrease $50,000
Pretax Income	Decrease $50,000	Increase $50,000
Ending Inventory on balance sheet	Decrease $50,000	Unaffected

Question: I am seeking an explanation as to why does the COGSand Pre-tax income change in opposition in the next period from thecurrent period.

Please help with an explanation so that I may understand.