(a) Introduction: The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined. To find: The amount of the inventory using lower cost or market applied on an item-by-item basis.
(a) Introduction: The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined. To find: The amount of the inventory using lower cost or market applied on an item-by-item basis.
Solution Summary: The author explains that the lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework.
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
Chapter 6, Problem 69BPSB
To determine
(a)
Introduction:
The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.
To find:
The amount of the inventory using lower cost or market applied on an item-by-item basis.
To determine
(b)
Introduction:
The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.
To prepare:
The journal entry to value inventory at lower of cost or market.
To determine
(c)
Introduction:
The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.
To state:
The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.
Question 4Waterfront Inc. wishes to borrow on a short-term basis withoutreducing its current ratio below 1.25. At present its current assetsand current liabilities are $1,600 and $1,000 respectively. How muchcan Waterfront Inc. borrow?
Question 6During 2019, Bitsincoins Corporation had EBIT of $100,000, a changein net fixed assets of $400,000, an increase in net current assets of$100,000, an increase in spontaneous current liabilities of $400,000,a depreciation expense of $50,000, and a tax rate of 30%. Based onthis information, what is Bitsincoin’s free cash flow?
Cariveh Co sells automotive supplies from 25 different locations in one country. Each branch has up to 30 staff working there, although most of the accounting systems are designed and implemented from the company's head office. All accounting systems, apart from petty cash, are computerised, with the internal audit department frequently advising and implementing controls within those systems.Cariveh has an internal audit department of six staff, all of whom have been employed at Cariveh for a minimum of five years and some for as long as 15 years. In the past, the chief internal auditor appoints staff within the internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief internal auditor.The chief internal auditor reports directly to the finance director. The finance director also assists the chief internal auditor in deciding on the scope of work of the internal audit department.You are an audit manager in the internal audit department…
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