In: Accounting
Journal Entry | ||||||
Accounts name | Debit | Credit | ||||
Cost of Goods Sold | 0.77 | |||||
Inventory | 0.77 | |||||
(To recognize inventory at lower of cost or NRV.) | ||||||
Cost per unit | 3.63 | |||||
NRV (Selling PRICE - Disposal) | 2.86 | |||||
Lower of above two | 2.86 | |||||
Difference f inventory value to be written off | 0.77 | |||||
Cost | Replacement Cost | NRV = Selling Price - Disposal | NRV-NP | Market | Inventory value(Lower of cost or market ) | |
3.63 | 3.34 | 2.86 | 1.996 | 2.86 | 2.86 | |
Note 2: Market price is same as replacement cost, but if replacement cost is more than NRV then NRV will be the market value, Also market price should not be less then NRV-NP. | ||||||