Question

Novelli's Nursery has developed the following data in order to calculate the lower of cost or net realizable value for its products. The individual products are listed within the categories of trees.

	Selling Price			Cost
Broad leaf trees:
Ash	$	1,740		$	1,640
Beech		2,590			1,540
Needle leaf trees:
Cedar	$	3,020		$	1,690
Fir		3,400			3,290
Fruit trees:
Apple	$	2,060		$	1,340
Cherry		2,690			1,740

The costs to sell are 10% of selling price.

Required:
Determine the reported inventory value assuming the lower of cost or net realizable value rule is applied to individual trees.

Answer 1

Answer-

NOVELLI'S NURSERY
Statement of Inventory using Lower of cost or market
Products	Cost per unit $	Estimated Selling price $ (a)	Cost to complete & Sell (b)	Net Realizable value (c=a-b)	Lower of cost or Net realizable value	Remark (Valued at)
			10% of sale	$	$
Broad leaf trees
Ash	1640	1740	174	1566	1566	Net realizable value
Beech	1540	2590	259	2331	1540	Cost price
				Total	3106
Needle leaf trees
Cedar	1690	3020	302	2718	1690	Cost price
Fir	3290	3400	340	3060	3060	Net realizable value
				Total	4750
Fruit Trees
Apple	1340	2060	206	1854	1340	Cost price
Cherry	1740	2690	269	2421	1740	Net realizable value
				Total	3080