Question

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

Homework Answers

Answer #1

The FASB Accounting Standards Codification is the set of accounting principles and guidelines set by GAAP.

1.It is stated in Topic 330, that to ease the valuation of inventory the inventory should be measured at" the lower of cost and net realisable value (LCNRV)". In other words LCNRV measures the decline in the value of a companys inventory.

2. There are several other factors used in applying LCNRV , such as

A. The guidance in Topic 330 is overlooked when the Cost of an inventory exceeds Net realizarea value(NRV) i.e. if cost of ana inventory is greater than NRV then cost valuation of inventory is done. If interim period Accounting the NRV is uncertain the decline in NRV of the inventory below cost shall be taken in conistence with the according period other than current.

B . If the inventory is an hedged item in a fair value hedge , the inventory cost used to calculate LCNRV should show the adjustments made to arrive at the carrying amount.

C. Depending upon the nature and type of inventory the rule of LCNRV should be applied, either to each item or to the total of inventory.

LCNRV is mandatef for items like harvested crops, Animals held for sale etc.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific citation for...
Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific citation for accounting for each of the following items: 1. Initial measurement of stock options. 2. The measurement date for share-based payments classified as liabilities. 3. The formula to calculate diluted earnings per share. 4. The way stock dividends or stock splits in the current year affect the presentation of EPS in the income statement.
Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific citation for...
Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific citation for each of the following items: 4. The specific seven-digit Codification citation (XXX-XX-XX) for the subsequent measurement of asset retirement obligations. 5. The specific seven-digit Codification citation (XXX-XX-XX) for the recognition of stock compensation. Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from customers, $290,000; Cash paid for rent, $30,000; Cash paid to employees for...
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...
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
The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles....
The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: Determine the specific citation for accounting for the following: 1.A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that generally...
use the online Professional View of the FASB Accounting Standards Codification (ASC) to answer several questions...
use the online Professional View of the FASB Accounting Standards Codification (ASC) to answer several questions in a written report. In the entire report, be sure to use “quotation marks” whenever you are not using your own words For the fourth set of questions, address each of the requirements. Problems/cases (8 points) 1. Topic: Debt Classification Database: FASB Codification Jettison Manufacturing is currently planning an expansion of its manufacturing facilities. As a result, in year 1, it obtained a $2...
The floor to be used in applying the lower-of-cost-or-market method to inventory is determined as the...
The floor to be used in applying the lower-of-cost-or-market method to inventory is determined as the a. replacement cost. b. net realizable value less normal profit margin. c. selling price less costs of completion and disposal. d. net realizable value.
Both Canadain GAAP for private enterprises and interational financial reporting standards (IFRS) follow the lower of...
Both Canadain GAAP for private enterprises and interational financial reporting standards (IFRS) follow the lower of cost and net realizable value rule to value inventory when market price are changing. Explain how this relates to the accounting guideline of conservatism.
The inventory of Royal Decking consisted of five products. Information about the December 31, 2018, inventory...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2018, inventory is as follows: Per Unit Product Cost Selling Price A $ 140 $ 160 B 180 200 C 140 180 D 100 150 E 60 80 Costs to sell consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. Required: What unit value should Royal Decking use for each of its products when applying the...
Ross Electronics has one product in its ending inventory. Per unit data consist of the following:...
Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; replacement cost, $18; selling price, $30; selling costs, $4. The normal profit is 30% of selling price. What unit value should Ross use when applying the lower of cost or market (LCM) rule to ending inventory?