Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 9.2BE
Lower of cost or net realizable value
• LO9–1
SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:
| Product 1 | Product 2 | |
| Cost | $50 | $34 |
| Selling price | 70 | 36 |
| Costs to sell | 6 | 4 |
Determine the carrying value of SLR’s inventory assuming that the lower of cost or net realizable value (LCNRV) rule is applied to individual products. What is the before-tax income effect of the LCNRV adjustment?
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SLR Corporation has 500 units of each of its two products in its year-end inventory. Per unit data for each of the products are as
follows:
Cost
Replacement cost
Selling price
Selling costs
Normal profit
Product 1
$ 53
51
73
Required 1
Determine the carrying value of SLR's inventory assuming that the lower of cost or market (LCM) rule is applied to individual products.
What is the before-tax income effect of the LCM adjustment?
Complete this question by entering your answers in the tabs below.
Product Cost
9
13
Required 2
Product 2
$ 37
29
39
7
11
Determine the carrying value of SLR's inventory assuming that the lower of cost or market (LCM) rule is applied to individual
products.
Market
Per Unit
Inventory Value
Unit
Cost
Lower of Cost
or Market
5
(11)
Chapter 9 Solutions
Intermediate Accounting
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - It is discovered in 2018 that ending inventory in...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Dollar-value LIFO retail LO95 This exercise is a...Ch. 9 - Change i n inventory costing methods LO96 In...Ch. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Inventory error LO97 In 2018, Winslow...Ch. 9 - Inventory error LO97 Refer to the situation...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or net realizable value LO91 Tatum...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.12ECh. 9 - Retail inventory method; average cost LO93 San...Ch. 9 - Prob. 9.14ECh. 9 - Retail inventory method; LIFO LO93 Crosby Company...Ch. 9 - Prob. 9.16ECh. 9 - Conventional retail method; employee discounts ...Ch. 9 - Retail inventory method; solving for unknowns ...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Prob. 9.20ECh. 9 - Dollar-value LIFO retail LO95 Lance-Hefner...Ch. 9 - Prob. 9.22ECh. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Prob. 9.24ECh. 9 - Error correction; inventory error LO97 During...Ch. 9 - Prob. 9.26ECh. 9 - Inventory error LO97 In 2018, the internal...Ch. 9 - Inventory errors LO97 In 2018, the controller of...Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.30ECh. 9 - Prob. 9.31ECh. 9 - Lower of cost or net realizable value LO91 Decker...Ch. 9 - Prob. 9.2PCh. 9 - Lower of cost or market LO91 Forester Company has...Ch. 9 - Prob. 9.4PCh. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Retail inventory method; conventional and LIFO ...Ch. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Dollar-value LIFO retail method LO95 [This is a...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Prob. 9.14PCh. 9 - Inventory errors LO97 You have been hired as the...Ch. 9 - Inventory errors LO97 The December 31, 2018,...Ch. 9 - Integrating problem; Chapters 8 and 9; inventory...Ch. 9 - Purchase commitments Appendix In November 2018,...Ch. 9 - Judgment Case 91 Inventoriable costs; lower of...Ch. 9 - Integrating Case 93 FIFO and lower of cost or net...Ch. 9 - Prob. 9.4BYPCh. 9 - Prob. 9.5BYPCh. 9 - Prob. 9.6BYPCh. 9 - Prob. 9.7BYPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9BYPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Ethics Case 911 Overstatement of ending inventory ...Ch. 9 - Analysis Case 912 Purchase commitments Appendix...Ch. 9 - Continuing Cases Target Case LO93, LO94, LO95...Ch. 9 - Prob. 1CCIFRS
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- Answer full question.arrow_forwardinv 3Company A sells only one product X. At the inventory on 31/12/20X5 it was found that there were 500 pieces of X in the warehouse at a cost of EUR 30 per piece. The net realisable market value of X was estimated at EUR 28 per piece but X also has a written non-cancellable agreement to sell 300 pieces of X to company B at EUR 31 per piece. At what value will X's stock be valued?In FY20X6 all the beginning inventory was sold. In particular, the 200 pieces that were valued to KAP were sold at € 35 per piece.Carry out the journal entries resulting from the above events up to the calculation of gross profit.arrow_forwardSLR Corporation has 900 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Cost Replacement cost Selling price Selling costs Normal profit Product 1 $ 67 65 87 23 27 Determine the carrying value of SLR's inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax income effect of the LCM adjustment? Required 1 Required 2 Complete this question by entering your answers in the tabs below. Product Cost Product 2 $ 51 43 53 1 2 Determine the carrying value of SLR's inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. Market 6 10 Per Unit Inventory Value Cost Unit 900 900 $ Inventory value < Required 1 Cost 0 Lower of Cost or Market $ Required 2 0arrow_forward
- Oo.96 Subject :- Accountarrow_forwardSienna Company uses the FIFO cost flow assumption. Sierra has inventory with a selling price of 100, packaging costs of 5, and transportation costs of 10. Siennas normal profit margin is 20. However, due to limited supply of the product from the manufacturer, it would cost Sienna 80 to replace the inventory. What amount should be used as the market value? a. 65 b. 80 c. 85 d. 100arrow_forward10 Vargas Company uses the perpetual inventory method. Vargas purchased 2,200 units of inventory that cost $23.00 each. At a later date the company purchased an additional 2,600 units of inventory that cost $24.00 each. Vargas sold 2,300 units of inventory for $27.00. If Vargas uses a FIFO cost flow method, the amount of cost of goods sold appearing on the income statement will be: 1 nts 01:10:09 Multiple Choice $50,600. $53,000 $9,100 $6,900.arrow_forward
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