Ivanhoe Distribution Co. has determined its December 31, 2017 inventory on a LIFO basis at $890,000. Information pertaining to that inventory follows: Estimated selling price $ 9,20,000 Estimated cost of disposal 30,000 Normal profit margin 1,10,000 Current replacement cost 8,10,000 Ivanhoe records losses that result from applying the lower-of-cost-or- market rule. At December 31, 2017, the loss that Ivanhoe should recognize is a.$0. b. $80000. c. $30000. d. $110000.

Ivanhoe Distribution Co. has determined its December 31, 2017 inventory on a LIFO basis at $890,000. Information pertaining to that inventory follows: Estimated selling price $ 9,20,000 Estimated cost of disposal 30,000 Normal profit margin 1,10,000 Current replacement cost 8,10,000 Ivanhoe records losses that result from applying the lower-of-cost-or- market rule. At December 31, 2017, the loss that Ivanhoe should recognize is a.$0. b. $80000. c. $30000. d. $110000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 2MC: Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31,...

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Lower of Cost or Market Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore's normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit, and the replacement cost is $6.50. Under the lower of cost or market rule, Moore's December 31, 2019, inventory of Product A should be valued at a unit cost of: a.$9.50 b.$6.50 c.$7.00 d.$9.00
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Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of 9.50. Because of a sharp decline in demand for the product, the selling price was reduced to 10.00 per unit. Moores normal profit margin on Product A is 2.00, disposal costs are 1.00 per unit, and the replacement cost is 6.50. Under the lower of cost or market rule, Moores December 31, 2019, inventory of Product A should be valued at a unit cost of: a. 6.50 b. 9.00 c. 7.00 d. 9.50
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