Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 9, Problem 9.1E
Lower of cost or net realizable value
• LO9–1
Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:
Required:
What unit values should Herman use for each of its products when applying the lower of cost or net realizable value (LCNRV) rule to ending inventory?
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TB MC Qu. 10-72 Konan, Inc. needs to determine...
Konan, Inc. needs to determine its inventory value. The following information pertains to the individual products in ending inventory:
Replacement Selling Cost of
Cost
Price
$50
$38
40
60
24
30
Product
L-19
M-23
N-05
Multiple Choice
O
Assuming Konan uses the FIFO method for costing its inventory, the writedown of inventory value for Product N-05 is
о
O
O
$6.
$2
$8.
Cost
$40
52
20
$0.
Completion
$2
10
2
Normal
Profit
$11
8
6
Inventory Write-Down
Stiles Corporation uses the LIFO cost flow assumption and is in the process of applying the LCM rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific
data for each product are as follows:
Historical cost
Replacement cost
Estimated cost of disposal
Estimated selling price
Product A Product B
$80
$96
70
98
32
30
150
120
Required:
1. What is the correct inventory value for each product?
Product A
Product B
$
per unit
per unit
2. Next Level With regard to requirement 1, what effect does the imposition of the constraints on market value have on the inventory valuations?
For Product A,
For Product B,
3
A company has four products in its inventory. Information about ending inventory is as follows:
Total Net
Realizable Value.
Product
101
102
103
104
Total Cost
$ 136,000
99,000
68,000
38,000
Required:
1. Determine the carrying value of ending inventory assuming the lower of cost or net realizable value (LCNRV) rule is applied to
individual products.
2. Assuming that inventory write-downs are common for the company, record any necessary year-end adjusting entry.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Product
Determine the carrying value of ending inventory assuming the lower of cost or net realizable value (LCNRV) rule is applied to
individual products.
101
102
103
104
$ 108,000
118,000
58,000
58,000
Cost
$ 136,000 $
99,000
68,000
38,000
341,000
$
NRV
108,000
118,000
58,000
58,000
Inventory
Value
$
0
Chapter 9 Solutions
Intermediate Accounting, 10 Ed
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 - 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 - 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 market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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