Question

Determining Lower of Cost or Net Realizable Value (NRV)

Crane Company had the following inventory at December 31, 2017.

	Unit Price
	Quantity	Cost	NRV
Desks
Model 9001	70	$190	$210
Model 9002	45	280	268
Model 9003	20	350	360
Cabinets
Model 7001	120	60	64
Model 7002	80	95	88
Model 7003	50	130	126

a. Determine the ending inventory amount by applying the net realizable value rule to:
1. Each item of inventory.
$Answer

2. Each major category of inventory.
$Answer

3. Total inventory.
$Answer

Answer 1

Solution : 1
	CALCULATION OF INVENTORY VALUE AS PER LOWER OF COST OR NET REALIZABLE VALUE
	PRODUCT	Quantity (A)	Unit Cost	Net Realizable Value	Cost of Ivnentory lower of Cost or Net Realizable Value (B)	Inventory Cost (AXB)
	Desk:
	Model 9001	70	$                     190	$                            210	$                                  190	$                         13,300
	Model 9002	45	$                     280	$                            268	$                                  268	$                         12,060
	Model 9003	20	$                     350	$                            360	$                                  350	$                           7,000
	Cabinet:
	Model 7001	120	$                       60	$                              64	$                                    60	$                           7,200
	Model 7002	80	$                       95	$                              88	$                                    88	$                           7,040
	Model 7003	50	$                     130	$                            126	$                                  126	$                           6,300
			Total			$                         52,900
	Answer = Inventory Value = 52,900
Solution : 2
	CALCULATION OF INVENTORY VALUE AS PER LOWER OF COST OR NET REALIZABLE VALUE - MAJOR CATEGORY
	PRODUCT	Quantity (A)	Unit Cost	Net Realizable Value	Cost of Ivnentory lower of Cost or Net Realizable Value (B)	Inventory Cost (AXB)
	Desk:
	Model 9001	70	$                     190	$                            210	$                                  190	$                         13,300
	Model 9002	45	$                     280	$                            268	$                                  268	$                         12,060
	Model 9003	20	$                     350	$                            360	$                                  350	$                           7,000
		Total				$                         32,360
	Cabinet:
	Model 7001	120	$                       60	$                              64	$                                    60	$                           7,200
	Model 7002	80	$                       95	$                              88	$                                    88	$                           7,040
	Model 7003	50	$                     130	$                            126	$                                  126	$                           6,300
		Total				$                         20,540
	Answer = Inventory Value = Desk = $ 32,360
	Answer = Inventory Value = Cabinet = $ 20,540
Solution : 3
	CALCULATION OF INVENTORY VALUE AS PER LOWER OF COST OR NET REALIZABLE VALUE
	PRODUCT	Quantity (A)	Unit Cost	Total Cost	Cost of Ivnentory lower of Cost or Net Realizable Value (B)	Inventory Cost at Realizable Value (AXB)
	Desk:
	Model 9001	70	$                     190	$                      13,300	$                                  190	$                         13,300
	Model 9002	45	$                     280	$                      12,600	$                                  268	$                         12,060
	Model 9003	20	$                     350	$                        7,000	$                                  350	$                           7,000
	Cabinet:
	Model 7001	120	$                       60	$                        7,200	$                                    60	$                           7,200
	Model 7002	80	$                       95	$                        7,600	$                                    88	$                           7,040
	Model 7003	50	$                     130	$                        6,500	$                                  126	$                           6,300
			Total	$                      54,200		$                         52,900
	Answer = Inventory Value = $ 52,900