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Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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![3. Presented below is information related to Headland Inc.'s inventory,
assuming Headland uses lower-of-LIFO cost-or-market.
(per unit)
Skis
Boots Parkas
Historical cost
$266.00 $148.40
$74.20
Selling price
296.80
203.00
103.25
Cost to distribute
26.60
11.20
3.50
Current replacement cost
284.20
147.00
71.40
Normal profit margin
44.80
40.60
29.75
Determine the following:
(a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the
lower-of-cost-or-market computation for skis.
(b) The cost amount that should be used in the lower-of-cost-or-market comparison of boots.
(c) The market amount that should be used to value parkas on the basis of the lower-of-cost-or-
market.](https://content.bartleby.com/qna-images/question/170c29ed-c4cc-4aec-b1d1-4919dc85ff12/d2f38405-35a5-40ea-8933-97aa3b8a9824/a3evpr_thumbnail.jpeg)
Transcribed Image Text:3. Presented below is information related to Headland Inc.'s inventory,
assuming Headland uses lower-of-LIFO cost-or-market.
(per unit)
Skis
Boots Parkas
Historical cost
$266.00 $148.40
$74.20
Selling price
296.80
203.00
103.25
Cost to distribute
26.60
11.20
3.50
Current replacement cost
284.20
147.00
71.40
Normal profit margin
44.80
40.60
29.75
Determine the following:
(a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the
lower-of-cost-or-market computation for skis.
(b) The cost amount that should be used in the lower-of-cost-or-market comparison of boots.
(c) The market amount that should be used to value parkas on the basis of the lower-of-cost-or-
market.
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