The inventory of Wildhorse Company on December 31, 2020, consists of the following items. Part Quantity Cost per Unit Net Realizable Value 110 660 $128.00 $135.00 111 1,040 81.00 70.00 112 540 108.00 103.00 113 210 229.50 243.00 120 410 277.00 281.00 121 a 1,700 22.00 1.00 122 280 324.00 317.00 a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap. (a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item. (b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory.
The inventory of Wildhorse Company on December 31, 2020, consists of the following items. Part Quantity Cost per Unit Net Realizable Value 110 660 $128.00 $135.00 111 1,040 81.00 70.00 112 540 108.00 103.00 113 210 229.50 243.00 120 410 277.00 281.00 121 a 1,700 22.00 1.00 122 280 324.00 317.00 a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap. (a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item. (b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The inventory of Wildhorse Company on December 31, 2020, consists of the following items.
|
Part
|
Quantity
|
Cost per Unit
|
Net Realizable Value
|
||||
|---|---|---|---|---|---|---|---|
|
110
|
660 | $128.00 | $135.00 | ||||
|
111
|
1,040 | 81.00 | 70.00 | ||||
|
112
|
540 | 108.00 | 103.00 | ||||
|
113
|
210 | 229.50 | 243.00 | ||||
|
120
|
410 | 277.00 | 281.00 | ||||
|
121
|
a
|
1,700 | 22.00 | 1.00 | |||
|
122
|
280 | 324.00 | 317.00 |
a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap.
(a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item.
(b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory.
Expert Solution
Step 1
LCM stands for Lower of cost or market method which states that when valuing the inventory of company, it is reported on the balance sheet at either market value or historical cost.
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