Please explain the correct approach for solving this financial accounting question. NovaTech purchased equipment inventory at $30 per unit, expected to sellat $45. However, due to market conditions, the net realizable value is $27per unit. What amount should NovaTech report per unit on the balance sheetunder the LCM rule?a. $30b. $27c. $45d. $18

Step 1: Define Lower of Cost or Market (LCM) RuleThe LCM rule requires inventory to be reported at…

Answered: NovaTech purchased equipment inventory…

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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NovaTech purchased equipment inventory at $30 per unit, expected to sell at $45. However, due to market conditions, the net realizable value is $27 per unit. What amount should NovaTech report per unit on the balance sheet under the LCM rule? a. $30 b. $27 c. $45 d. $18