The following information is taken from Aden Company's records: Product Group Units Cost/Unit Market/Unit A 1 700 $1.00 $0.80 B 1 300 1.50 1.55 2 200 4.90 5.15 D 2 100 6.50 6.40 E 3 80 25.00 24.60 Required: What is the correct inventory value if the company applies the LCNRV rule to each of the following? a. Individual items Product A Product B Product C Product D Product E Total inventory value b. Groups of items Group 1 Group 2 Group 3 Total inventory value c. The inventory as a whole Total inventory value %24
Answer a)
Calculation of Value of Inventory of the company applies Lower of Cost or Net Realizable Value rule to Individual Items
|
Product |
Units |
Cost per unit |
Market value per unit |
Lower of Cost or Market Value per unit |
Value of Inventory (Number of units X lower of Cost or Market value per unit) |
|
A |
700 |
$ 1.00 |
$ 0.80 |
$ 0.80 |
$ 560.00 |
|
B |
300 |
$ 1.50 |
$ 1.55 |
$ 1.50 |
$ 450.00 |
|
C |
200 |
$ 4.90 |
$ 5.15 |
$ 4.90 |
$ 980.00 |
|
D |
100 |
$ 6.50 |
$ 6.40 |
$ 6.40 |
$ 640.00 |
|
E |
80 |
$ 25.00 |
$ 24.60 |
$ 24.60 |
$ 1,968.00 |
|
Value of Inventory |
$ 4,598.00 |
||||
Final Answer: Value of Inventory will be $ 4,598.
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