Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 10, Problem 10.3MC
Simmons, Inc. uses the lower-of-cost-or-market method to value its inventory that is accounted for using the LIFO method. Data regarding an item in its inventory is as follows:
| Cost | $26 | |
| Replacement cost | 20 | |
| Selling price | 30 | |
| Cost of completion and disposal | 2 | |
| Normal profit margin | 7 |
What is the lower of cost or market for this item?
- a. $21
- b. $20
- c. $28
- d. $26
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Students have asked these similar questions
The following information is taken from a company’s records.
Costper Unit
Market valueper Unit
Inventory Item 1 (10 units)
$40
$39
Inventory Item 2 (23 units)
20
20
Inventory Item 3 (12 units)
8
10
Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
On the basis of the following data:
Product
InventoryQuantity
Cost perUnit
Market Value per Unit(Net Realizable Value)
Model A
42
$74
$90
Model B
45
181
202
Model C
29
166
171
Model D
12
130
112
Model E
24
159
158
Determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9.
Inventory at the Lower of Cost or Market
Product
Total Cost
Total Market
Lower of Total Cost or Total Market
A
$
$
$
B
C
D
E
Total
$
$
$
The following information is taken from a company’s records.
Costper Unit
Market valueper Unit
Inventory Item 1 (10 units)
$39
$38
Inventory Item 2 (22 units)
19
19
Inventory Item 3 (12 units)
9
11
Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
$fill in the blank 1
Chapter 10 Solutions
Intermediate Accounting (2nd Edition)
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