Question
SLR Corporation has 1,200 units of each of its two products in its year-end inventory. Per...
SLR Corporation has 1,200 units of each of its two products in
its year-end inventory. Per unit data for each of the products are
as follows:
| Product 1 | Product 2 | |||||||
| Cost | $ | 59 | $ | 43 | ||||
| Replacement cost | 57 | 35 | ||||||
| Selling price | 79 | 45 | ||||||
| Selling costs | 15 | 7 | ||||||
| Normal profit margin | 19 | 11 | ||||||
Determine the balance sheet carrying value of SLR’s inventory
assuming that the lower of cost or market (LCM) rule is applied to
individual products. What is the before-tax income effect of the
LCM adjustment?
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