Valuing Inventory at Lower-of-Cost-or-Market
Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of selling price, and gross profit is estimated to be 25% of the selling price. Determine the value of inventory applying the lower-of-cost-or-market rule to each individual inventory item.
Note: Round each amount to the nearest dollar.
|Estimated selling price||$66||$76||$82||$100||$130|
|Original cost (LIFO)||45||48||60||63||90|
|Inventory at the lower-of-cost-or-market||Answer||Answer||Answer||Answer||Answer|
|Replacement cost (A)||Net realizable value (NRV) (B)||NPV - Gross profit (C)||Market value [ Middle of A,B,C ]||Original cost||Lower of cost or market|
|Working note :|
|Estimated selling price||Cost of disposal [ 10% of selling price ]||Gross profit [ 25% of selling price ]||NRV [ Estimated selling price - Cost of disposal ]||NPV - Gross profit|
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