Brief Exercise 6-7 Flint Corporation accumulates the following cost and market data at December 31. Inventory...

Brief Exercise 6-7 Flint Corporation accumulates the following cost and market data at December 31. Inventory Categories Cost Data Market Data Cameras $10,484 $11,674 Camcorders 8,798 9,348 DVDs 11,062 10,052 Compute the lower-of-cost-or-market valuation for company’s inventory. The lower-of-cost-or-market value $ _________

Expert Solution

Inventories are valued at:

Cost value, or
market Value,

Whichever is LOWER.

Working

	Cost	Market Value	Lower of Cost or Market value
Cameras	$ 10,484.00	$ 11,674.00	$ 10,484.00
Cam recorders	$ 8,798.00	$ 9,348.00	$ 8,798.00
DVDs	$ 11,062.00	$ 10,052.00	$ 10,052.00
Total	$ 30,344.00	$ 31,074.00	$ 29,334.00

ANSWER:

Based on above working, if company values Inventories as per Lower of Cost or NRV rule on INDIVIDUAL BASIS, The lower-of-cost-or-market-value will be $ 29,334.

If Lower of cost or NRV rule is followed on TOTAL BASIS, The lower-of-cost-or-market-value will be $ 30,344, because total of costs is LOWER than total of Market Values.

ekkarill92 answered 1 year ago

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