The December 31, 2025 inventory of Migos Company consisted of fourproducts, for which certain information is provided below.EstimatedExpected Normal ProfitProduct Original CostPriceon SalesA$40.00B$48.00C$190.00D$26.00$24.0020%$42.0025%$120.0030%$19.0010%Show Transcribed TextReplacementCost$22.00$40.00$115.00$15.80Disposal Cost$6.50$10.00$25.00$4.00SellingInstructions: The number of units in stock for each product at the end ofthe year are as follows: 200 units of Product A, 43 units of Product B, 74units of Product C, and 120 units of Product D. Determine theappropriate value of inventory to report on the balance sheet atDecember 31, 2025, assuming Migos Company applies lower of cost ormarket for all inventory.

Lower of cost or market is an approach to valuation of inventory. The concept of lower of cost and…

The December 31, 2025 inventory of Migos Company consisted of four products, for which certain information is provided below. Estimated Expected Normal Profit Product Original Cost Price on Sales Replacement Cost Disposal Cost Selling

The December 31, 2025 inventory of Migos Company consisted of four products, for which certain information is provided below. Estimated Expected Normal Profit Product Original Cost Price on Sales Replacement Cost Disposal Cost Selling

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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Question

The December 31, 2025 inventory of Migos Company consisted of four
products, for which certain information is provided below.
Estimated
Expected Normal Profit
Product Original Cost
Price
on Sales
A
$40.00
B
$48.00
C
$190.00
D
$26.00
$24.00
20%
$42.00
25%
$120.00
30%
$19.00
10%
Show Transcribed Text
Replacement
Cost
$22.00
$40.00
$115.00
$15.80
Disposal Cost
$6.50
$10.00
$25.00
$4.00
Selling
Instructions: The number of units in stock for each product at the end of
the year are as follows: 200 units of Product A, 43 units of Product B, 74
units of Product C, and 120 units of Product D. Determine the
appropriate value of inventory to report on the balance sheet at
December 31, 2025, assuming Migos Company applies lower of cost or
market for all inventory.

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Step 1: Lower of cost or market:

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Step 2: Determine the lower-of-cost or market per unit of each product:

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Step 3: Determine the value of inventory to be reported on Balance Sheet using LCM:

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