ABC company follows the principle of lower of cost or net realizable value (NRV) to report itsinventory. The following shows the data related to the inventory on 12/31/2020:Product ModelModel XModel YModel ZModel AlphaUnits20151030PediaCost per$150110125140unitNRV per unit$155105115150What amount should ABC report its total cost of inventory on the 12/31/2020 BalanceSheet?

Name: ABC company follows the principle of lower of cost or net realizable
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Description: ABC company follows the principle of lower of cost or net realizable value (NRV) to report itsinventory. The following shows the data related to the inventory on 12/31/2020:Product ModelModel XModel YModel ZModel AlphaUnits20151030PediaCost per$1501

The inventory data for ABC company on 12/31/2020 in table format. The value reported is the lower of…

Answered: What amount should ABC report its total…

Business

Accounting

What amount should ABC report its total cost of inventory on the 12/31/2020 Balance Sheet?

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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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

ABC company follows the principle of lower of cost or net realizable value (NRV) to report its
inventory. The following shows the data related to the inventory on 12/31/2020:
Product Model
Model X
Model Y
Model Z
Model Alpha
Units
20
15
10
30
Pedia
Cost per
$150
110
125
140
unit
NRV per unit
$155
105
115
150
What amount should ABC report its total cost of inventory on the 12/31/2020 Balance
Sheet?

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