Question

I am not quite sure what this question is asking, nor do I understand how to apply the lower-of-cost-or-NRV.

The controller of Alt Company is applying the lower-of-cost-or-net realizable value basis of valuing its ending inventory. The following information is available:

Cost Net Realizable

Value

Lawnmowers:

Self-propelled $14,800 $17,000

Push type 19,000 18,000

Total 33,800 35,000

Snowblowers:

Manual 29,800 31,000

Self-start 19,000 21,000

Total 48,800 52,000

Total inventory $82,600 $87,000

Compute the value of the ending inventory by applying the lower-of-cost-or-NRV. Show your work.

Answer 1

Ans.		Cost	Net Realizable Value	Lower of cost or NRV
	Lawnmowers:
	Self - propelled	$14,800	$17,000	$14,800
	Push type	$19,000	$18,000	$18,000
	Total	$33,800	$35,000	$32,800
	Snowblowers:
	Manual	$29,800	$31,000	$29,800
	Self start	$19,000	$21,000	$19,000
	Total	$48,800	$52,000	$48,800
	Total inventoy	$82,600	$87,000	$81,600
	To calculate the ending inventory using the lower of cost and net realizable value we need
	to find out the lower value between cost and net realizable value for the particular item.
	Then the sum of all items lower value will be known as total value of ending inventory by
	applying the lower or cost or NRV.
	*Lower of cost or NRV   =    Lower value between total cost and total Net realizable value