Question

Sunland Corporation has the following four items in its ending inventory.

Item Cost Net Realizable Value (NRV) Jokers $2,520 $2,646 Penguins 6,300 6,237 Riddlers 5,544 5,828 Scarecrows 4,032 4,826 (a) Determine the following the LCNRV for each item. Item LCNRV Jokers $enter a dollar amount Penguins enter a dollar amount Riddlers enter a dollar amount Scarecrows enter a dollar amount

Answer 1

Statement showing LCNRV for each item :

Item	Amount
Jokers	$2520
Penguins	$6237
Riddlers	$5544
Scarecrows	$4032
Total	$18333

Note : LCNRV value of each item is identified by taking the lower value of cost or net realisable value.

For example, in the case of Jokers item the cost of inventory is $2520 and net realisable value is $2646. So the lower value between $2520 and $2646 is $2520. Therefore, the LCNRV for Jokers is $2520. Similarly for the remaining items also the LCNRV is identified.

The total value of inventory at which the entity discloses in its financial statements is sum of LCNRV of all items.