Question

Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the...

Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the use of the LCNRV method of valuing inventories?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Part A

The inventories valued at the lower-of-cost-or-net realizable value (LCNRV) because when the market price is lower than the cost ororiginal price, then the loss is required to be written down to make financial statements more accurate.

Part B

The arguments against the use of the LCNRV method of valuing inventories is that the result derived may be inconsistent due to the application of LCNRV as inventory may be reported at cost in one year and may be at market value in next year. This may lead to distortion of some data.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the...
Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the use of the LCNRV method of valuing inventories?
The lower of cost and net realizable value basis of valuing inventories ensures that inventories are...
The lower of cost and net realizable value basis of valuing inventories ensures that inventories are a) valued at their selling price. b) valued at their current cost. c) not over-valued. d) not under-valued.
Explain the lower of cost and net realizable value approach to valuing inventory.
Explain the lower of cost and net realizable value approach to valuing inventory.
Inventory are stated at the lower of cost, computed using FIFO method, and net realizable value....
Inventory are stated at the lower of cost, computed using FIFO method, and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. Write several sentences in your own words to clearly describe what this means based on the description provided above.
Problem 9-1 (Algo) Lower of cost or net realizable value; by product and by total inventory...
Problem 9-1 (Algo) Lower of cost or net realizable value; by product and by total inventory [LO9-1] Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity Unit Cost Unit Selling Price A 1,300 $ 16 $ 22 B 1,100 21 24 C 900 3 8 D 500 7 6 E 900 20 19 The cost to sell for each product consists of a 10 percent sales commission. Required: 1. Determine the...
Identifying a Loss in Applying Lower-of-Cost-or-Net Realizable Value Information related to three products of Adelle Corporation...
Identifying a Loss in Applying Lower-of-Cost-or-Net Realizable Value Information related to three products of Adelle Corporation follows. Product A. Product B Product C Estimated Selling Price. $56 $70 $78 Original Cost (FIFO) 42 56 50 Cost of Disposal 6 11 8 Cost of Completion 14 0 6 a. What inventory value is reported in the balance sheet for total inventory under the lower-of-cost-or-net realizable value rule assuming each individual item is evaluated? Product A inventory Value $ _______ Product B...
FASB ACcounting Standards Codification: 1. Measurement of ending inventory using the lower of cost or net...
FASB ACcounting Standards Codification: 1. Measurement of ending inventory using the lower of cost or net realizable value (LCNRV) rule 2. The level of aggregation that should be used in applying the LCNRV or LCM rule
Determining Lower of Cost or Net Realizable Value (NRV) The following data refer to Froning Company’s...
Determining Lower of Cost or Net Realizable Value (NRV) The following data refer to Froning Company’s ending inventory. Item Code Quantity Unit Cost Unit NRV LXC 500 $45 $48 KWT 180 38 34 MOR 300 22 20 NES 200 27 32 Determine the ending inventory amount by applying the lower of cost or net realizable value rule to: (a) each item of inventory $Answer (b) the total inventory. $Answer
This data is for selected inventory items at Deluxe Supply Company. Quantity Unit Cost Net Realizable...
This data is for selected inventory items at Deluxe Supply Company. Quantity Unit Cost Net Realizable Value Printer Cartridges Item 119 66 $ 32.00 $ 32.50 Item 120 76 27.25 24.50 Item 121 106 31.00 27.50 Fax Machines Item 210 23 94.00 97.00 Item 211 18 200.00 194.00 Item 212 17 233.00 218.00 Required: 1&2. Determine the total amount to be reported as the inventory valuation at cost or net realizable value, whichever is lower, under lower of cost or...
Why is it necessary to value inventories using the lower of cost or NRV concept?
Why is it necessary to value inventories using the lower of cost or NRV concept?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT