LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements. (a) (1) To determine the amount of inventory to be reported in the balance sheet of S Corporation.

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Answer 1

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

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On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $846,000 Current liabilities $564,000 Noncurrent assets 2,538,000 Long-term liabilities 470,000 Stockholder's equity 2,350,000 Total assets $3,384,000 Total liabilities and stockholder's equity $3,384,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At December 31, 2026, Pharoah reports the following balance sheet information: Current assets $752,000 Noncurrent assets (including goodwill recognized in purchase) 2,256,000 Current liabilities (658,000) Long-term liabilities (470,000) Net assets $1,880,000 It is determined that the fair value of the Pharoah division is $2,068,000.

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Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

Expert Solution & Answer

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

Answer 6

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

Answer 7

Chapter 9, Problem 4CA

To determine

LCNRV: LCNRV refers to the lower-of-cost-and-net realizable value. Inventories are generally recorded at cost. When there is evidence that there is a disposal of the usefulness of inventory goods in the ordinary course of business being lesser than cost, then the difference will be recognized as a loss in the current period. The inventory will be stated as the “net realizable value” in the financial statements.

(a)

(1)

To determine the amount of inventory to be reported in the balance sheet of S Corporation.

Answer 8

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

Answer 9

To determine

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

Answer 10

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

Answer 11

To determine

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

Answer 12

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Answer 13

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Answer 15

Ch. 9 - Prob. 1Q Ch. 9 - Prob. 2Q Ch. 9 - 3. What approaches may be employed in applying...Ch. 9 - Prob. 4Q Ch. 9 - Prob. 5Q Ch. 9 - Prob. 6Q Ch. 9 - Prob. 7Q Ch. 9 - Prob. 8Q Ch. 9 - Prob. 9Q Ch. 9 - Prob. 10Q

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(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

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Chapter 9 Solutions

Concept explainers

Videos

(2) To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

(b) To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.

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Chapter 9 Solutions

(2)

To determine the reason for using the rule of lower-of-cost-or-market to report inventory.

(b)

To determine the effect of ending inventory and cost of goods sold by using the LIFO inventory method instead of average cost inventory method.