What adjustment should be made to the consolidated financial statements for the year ended December 31, 20X4, with respect to the $10,000 fair value adjustment to inventory?

A) An adjustment should be made through opening retained earnings.
B) An adjustment should be made to cost of sales.
C) No adjustment is required as an adjustment would have already been made to inventory at the time of sale.
D) No adjustment is required as an adjustment would have already been made to cost of sales at the time of sale.

The fair value adjustment to inventory reflects a decrease in the value of inventory from its carrying value on the books. This decrease in value should be recognized as an expense on the income statement, in the cost of sales account. Therefore, an adjustment should be made to cost of sales in the consolidated financial statements for the year ended December 31, 20X4. Choice A is incorrect because adjusting opening retained earnings wouldn't reflect the current period's activity. Choice C and D are incorrect because they suggest that an adjustment has already been made, which is not the case for the fair value adjustment to inventory.