Answer:
The value of toasters is $540
The cost of $27 each is lower than net realizable value of $30 each
Explanation:
Bonnies Store would value 20 toasters on hand at cost of $27 each since the cost per unit of $27 is lower than net realizable value of $30 as required by both U.S GAAP and International Financial Reporting Standards(IFRS).
As a result the closing value of the 20 toasters would be $540($27*20) in the balance sheet recorded under inventory as the toasters are items bought for resale by Bonnie Stores.
Answer:
$540, because it is lower than the net realizable value of $600
Explanation:
Generally Acceptable Accounting Principles requires that the closing inventory should be valued at lower of cost and Net realizable value.
Closing Inventory Value
Cost = 20 Toasters x $27 = $540
Realizable Value = 20 Toasters x $30 = $600
Lower of cost and net realizable value determine the value of closing inventory based on the cost incurred to produce or purchase a inventory unit or net realizable value of the inventory unit which ever is lower. In this question cost of unit of inventory is $540 and net realizable value is $600, cost of inventory is lower, the cost value of $540 will be reported as the on the balance sheet.
