Required information [The following information applies to the questions displayed below.] A company like Golf USA that sells golf-related inventory typically will have inventory items such as golf clothing and golf equipment. As technology advances the design and performance of the next generation of drivers, the older models become less marketable and therefore decline in value. Suppose that in the current year, Ping (a manufacturer of golf clubs) introduces the MegaDriver II, the new and improved version of the MegaDriver. Below are year-end amounts related to Golf USA's inventory. Inventory Shirts MegaDriver MegaDriver II Quantity 40 20 35 Unit Cost $56 410 430 Unit NRV $75 340 470

Required information [The following information applies to the questions displayed below.] A company like Golf USA that sells golf-related inventory typically will have inventory items such as golf clothing and golf equipment. As technology advances the design and performance of the next generation of drivers, the older models become less marketable and therefore decline in value. Suppose that in the current year, Ping (a manufacturer of golf clubs) introduces the MegaDriver II, the new and improved version of the MegaDriver. Below are year-end amounts related to Golf USA's inventory. Inventory Shirts MegaDriver MegaDriver II Quantity 40 20 35 Unit Cost $56 410 430 Unit NRV $75 340 470

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter6: Inventories

Section: Chapter Questions

Problem 16E: Based on the data in Exercise 6-15 part (a) and assuming that cost was determined by the FIFO...

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Describe the entry to adjust from cost to net realizable value for inventory write-downs. What effects does this adjustment have on (a) assets, (b) liabilities, (c) stockholders’ equity (or retained earnings), (d) revenues, (e) expenses, and (f) net income?
erms and phrases relating to concepts discussed in this chapter along with descriptions of those terms and phrases follow. Match each term, 1 through 15, with the best description a through o. Key Inventory Terms and Phrases Key Inventory Terms and Phrases Description of Terms and Phrases Answerabcdefghijklmno 1. Net realizable value a. Requires retroactive restatement of financial statements Answerabcdefghijklmno 2. Lower-of-cost-or-market b. Method for valuing inventory applying to LIFO and retail methods Answerabcdefghijklmno 3. Allowance to reduce inventory to net realizable value c. Cancellation of additional markup Answerabcdefghijklmno 4. Gross profit method d. Inventory estimation that is not acceptable under GAAP Answerabcdefghijklmno 5. Estimated loss on purchase commitment e. Method that approximates lower-of-cost-or-market Answerabcdefghijklmno 6. Change in inventory method from average to FIFO f. Not usually practical to retroactively restate or adjust…
Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows: Sales Revenue $ 160,000 Cost of Goods Sold Beginning Inventory $ 20,000 Purchases 101,000 Goods Available for Sale 121,000 Ending Inventory 38,140 Cost of Goods Sold 82,860 77,140 36,000 41,140 8,228 Gross Profit Operating Expenses Income from Operations Income Tax Expense (20%) Net Income $ 32,912 Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending inventory: Purchase Cost Replacement Cost per Quantity 2,000 Per Unit $ 4.00 Item Total Unit $ 8,000 4,640 13,500 12,000 A $ 5.00 B 800 5.80 2.90 4,500 2,000 C 3.00 1.45 D 6.00 4.00 $ 38,140
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