Determining Lower of Cost or Net Realizable Value (NRV) Crane Company had the following inventory at December 31. Unit Price Quantity Cost NRV Desks Model 9001 Model 9002 Model 9003 Cabinets Model 7001 Model 7002 Model 7003 105 $190 $210 70 280 268 30 350 360 180 60 64 120 95 88 75 130 126 a. Determine the ending inventory amount by applying the net realizable value rule to: 1. Each item of inventory. $ 3. Total inventory. $ 2. Each major category of inventory. $

Determining Lower of Cost or Net Realizable Value (NRV) Crane Company had the following inventory at December 31. Unit Price Quantity Cost NRV Desks Model 9001 Model 9002 Model 9003 Cabinets Model 7001 Model 7002 Model 7003 105 $190 $210 70 280 268 30 350 360 180 60 64 120 95 88 75 130 126 a. Determine the ending inventory amount by applying the net realizable value rule to: 1. Each item of inventory. $ 3. Total inventory. $ 2. Each major category of inventory. $

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Description: Determining Lower of Cost or Net Realizable Value (NRV)Crane Company had the following inventory at December 31.Unit PriceQuantity Cost NRVDesksModel 9001Model 9002Model 9003CabinetsModel 7001Model 7002Model 7003105 $190 $21070 280 26830 350 360180

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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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Determining Lower of Cost or Net Realizable Value (NRV)
Crane Company had the following inventory at December 31.
Unit Price
Quantity Cost NRV
Desks
Model 9001
Model 9002
Model 9003
Cabinets
Model 7001
Model 7002
Model 7003
105 $190 $210
70 280 268
30 350 360
180 60
64
120 95 88
75 130 126
a. Determine the ending inventory amount by applying the net realizable value rule to:
1. Each item of inventory.
$
3. Total inventory.
2. Each major category of inventory.
$

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Step 1: Define NRV

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Step 2: 1) Computation of lower of cost and NRV of each item is as follows-

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Step 3: 2) Computation of lower of cost and NRV of each major category of inventory is as follows-

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Step 4: 3) computation of the lower of cost and NRV of total inventory is as follows-

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