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Affliction Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2014, consists of products D, E, F, G, H, and I. Relevant per-unit data for these products appear below. Using the lower-of-cost-or-market rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2014, for each of the inventory items below.
Item D Item E Item F Item G Item H Item I
Estimated selling price $130 $98 $95 $85 $105 $80
Cost 100 80 60 80 65 42
Replacement cost 110 65 70 50 70 40
Estimated selling expense 25 25 20 20 25 25
Normal profit 30 18 25 27 22 20

Respuesta :

jepessoa

Answer:

                                                D         E        F         G         H         I

Estimated selling price        $130    $98    $95    $85    $105   $80

Cost                                      $100     $80   $60    $80     $65    $42

Replacement cost                $110     $65    $70    $50     $70    $40

Estimated selling expense   $25     $25    $20    $20    $25    $25

Normal profit                         $30      $18    $25    $27     $22    $20

net realizable value             $105     $73    $75    $65     $80    $55

When a company uses the lower of cost or market value, it records the price of its inventory at whichever is lower from the original purchase cost or the current market price (replacement cost):

Item D ⇒ original purchase cost is lower, reported at $100

Item E ⇒ replacement cost (market value) is lower, reported at $65

Item F ⇒ original purchase cost is lower, reported at $60

Item G ⇒ replacement cost (market value) is lower, reported at $50

Item H ⇒ original purchase cost is lower, reported at $65

Item I ⇒ replacement cost (market value) is lower, reported at $40

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