Island Solutions is a technology business that retails and wholesales computer hardware along with a wide variety of technology products and solution services. Recently, several competitors have entered the market and introduced new products that might drive some of the business’ inventory into obsolescence. The company has always been IRFS compliant and wants to ensure that it follows the appropriate authoritative literature in determining the accounting for some significant market changes. The accountant at Island Solutions has tasked two small teams of interns from to conduct several pieces of research and dry-run practices.
Island Solutions is a technology business that retails and wholesales computer hardware along with a
wide variety of technology products and solution services. Recently, several competitors have entered
the market and introduced new products that might drive some of the business’ inventory into
obsolescence. The company has always been IRFS compliant and wants to ensure that it follows the
appropriate authoritative literature in determining the accounting for some significant market changes.
The accountant at Island Solutions has tasked two small teams of interns from to conduct several pieces of research and dry-run practices.
The following data is available for the month of September for two items of inventory that might
soon be render obsolete for Island Solutions.
Inventory balances at September 1, 2023, were as follows:
USB-C (TA3) Hub – 200 @ $400 ea.
USB-C (TB3) Hub – 600 @ $800 ea.
USB-C (TA3) HUB
| Date | Purchases | Sales |
| Sep 5 | 500 @450 | |
| Sep 10 | 500@540 | |
| Sep 15 | 400 @475 | |
| Sep 20 | 400 @570 | |
| Sep 25 | 300 @500 |
USB-C (TB3) HUB
| Date | Purchases | Sales |
| Sep 10 | 600 @900 | |
| Sep 19 | 300 @950 | |
| Sep 25 | 900 @1080 | |
| Sep 28 | 500 @1000 | |
| Sep 30 | 600 @1140 |
In addition to the inventory data provided above, Island Solutions accountant has made the
following projections in light of the market changes.
| USB-C (TA3) HUB | USB-C (TB3) HUB | |
| Expected Unit Selling Price (net of cost to sell) | 580 | $1 050 |
| Costs to Complete | 30 | 150 |
1. Assume Island Solutions applies LCNRV at the major group level and for this purpose places TA3
and TB3 Hubs in one major group, determine the value of inventory that should be reported on
the
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The question asks for the major group level but the solution is for the individual product level.
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