Data related to the inventories of Alpine Ski Equipment and Supplies is presented below: Skis Boots Apparel SuppliesSelling price$164,000 $157,000 $116,000 $69,000 Cost 138,000 138,000 81,200 44,850 Replacement cost 133,000 112,000 101,200 40,850 Sales commission 10% 10% 10% 10% In applying the lower of cost or net realizable value rule, the inventory of skis would be valued at:

Lower of cost or net realisable involves estimation of inventory cost by taking an amount that is lower of historical cost or the amount that can be realised by selling the inventories in the market.The cost of skis is $138,000 and its realisable value (selling price) is $164,000. Using the lower of cost or net realisable value method, the inventory will be valued at $138,000 that is the lower of two amounts. Inventory of skis will be valued at $138,000

Answered: Data related to the inventories of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Data related to the inventories of Alpine Ski Equipment and Supplies is presented below:

	Skis		Boots	Apparel		Supplies
Selling price	$	164,000		$	157,000		$	116,000		$	69,000
Cost		138,000			138,000			81,200			44,850
Replacement cost		133,000			112,000			101,200			40,850
Sales commission		10	%		10	%		10	%		10	%

In applying the lower of cost or net realizable value rule, the inventory of skis would be valued at:

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