The net realizable value of Lake Corporation’s inventory has declined below its cost. Allyn Conan, the controller, wants to use the loss method to write down inventory because it more clearly discloses the decline in the net realizable value and does not distort the cost of goods sold. His supervisor, financial vice president Bill Ortiz, prefers the costof-goods-sold method to write down inventory because it does not call attention to the decline in net realizable value.InstructionsAnswer the following questions.(a) What, if any, is the ethical issue involved?(b) Is any stakeholder harmed if Bill Ortiz’s preference is used?(c) What should Allyn Conan do?

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A: For financial reporting purposes, will value the inventory in accounting at lower prices or on the…

Q: If ending inventory is understaffed for year 1, then in year 2…. A. Costa of goods sold and gross…

A: Inventory is the term used in accounting which refers to the goods as well as materials that the…

Q: Which of the following would best explain an decrease in the company's inventory turnover? A. Due…

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Q: Current Attempt in Progress If a company overstates its closing inventory, it will O understate…

A: When closing inventory is overstated, this reduces the amount of inventory that would otherwise have…

Q: The level of inventory a company maintains has important economic consequences, and it involves…

A: Ending inventory refers to the inventory which is left at the end of the accounting period. This…

Q: Jamison Corporation’s inventory cost in its balance sheet is lower using the first-in, first-out…

A: Option b. down is the answer.

Q: During times of inflation, which of these inventory accounting methods is best for cash flow? JUST…

A: given information   need to find the incorrect statement in the below-given options given in the…

Q: Which of the following is not a disadvantage of the LIFO inventory cost flow assumption? a. The…

A: LIFO is the Last in first out method of inventory which says that inventory purchased last should be…

Q: Cheryl believes that companies report cost of goods sold and ending inventory based on actual units…

A: Cost of goods sold: Cost of goods sold is the accumulate total of all direct cost incurred in…

Q: Hunter, Inc. uses the LIFO method of inventory costing and is facing the possibility of a LIFO…

A: Concept : It occurs when a company using LIFO inventory valuation method sells more goods old stock…

Q: A company's inventory cost was lower in FIFO than it would have been using LIFO. Assuming no…

A: Inventory is the stock of goods with the company which is ready to sell out. It covers large…

Q: The weighted average inventory cost flow method is the least used of the inventory costing methods.…

A: Step 1 “Since you have posted a question with multiple questions, we will solve the first question…

Q: Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule…

A: The rule of valuing the inventory at cost or net realizable value is also called as Prudence concept…

Q: Which one of the following is not a disadvantage of the specific identification method of inventory…

A: Under specific identification methods of inventory, specific inventory movement is measured. So it…

Q: Application of the lower-of-cost-or-market rule results in inconsistency because a company may value…

A: Lower of Cost or market rule states that while estimating value of the company's Inventory it is…

Q: An increasing inventory turnover ratio indicates that: a.a company has reduced the time it takes to…

A: The inventory turnover ratio indicates the efficiency of a business to purchase and selling its…

Q: Hudson Company, which is both a wholesaler and a retailer, purchases its inventories from various…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: onary times LIFO assigns to inventory the costs of the oldest items acquired by the company, thus…

A: Companies can use either the FIFO or LIFO inventory valuation methodologies under US GAAP, however…

Q: Vanity Corporation sells different types of paint. Due to the low demand, it would be testing its…

A: Inventory costing is valued at lower of cost or net market value. Inventory loss is debited to…

Q: Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared tothe cost of replacing…

A: If a company follows FIFO method, then the inventory will go based on first in first out. If a…

Q: 33. What is the estimated fire loss if 000 Company appies the conservative retail approach? 34. What…

A:

Q: Alice Judy operates a chain of beauty-products retail stores. Her stock holding carries several…

A: Categories under ABC Analysis 80% of Inventory Value = Category A 15% of Inventory Value = Category…

Q: The major criticism of the lower of cost or market rule for valuation of inventory is that

A:

Q: Overstating ending inventory in the current year causes net income in the current year to be…

A: 1. True 2. False The weighted-average cost includes both beginning inventory and purchases and is…

Q: Hudson Company, which is both a wholesaler and a retailer, purchases its inventories from various…

A: Conceptually, the warehousing costs related to the wholesale inventories should not be included in…

Q: Assume that a firm separately determined inventory under FIFO and LIFO and then compared the…

A: FIFO is a method of costing inventory in which the inventory purchased first is out first for…

Q: Which statements below are true? 1. LCM and LCNRV may be applied by individual products, by…

A:

Q: Which of the following statement is not valid as it applies to inventory costing method?  A) If…

A: The correct answer is Option (d)

Q: Analysts must recognize that the use of the specific identification method to value inventory has a…

A: The amount, by which the Inventory Level exceeds the Closing Inventory level is referred to as the…

Q: - An analyst observes a decrease in a company's inventory turnover. Which of the following puld most…

A: Solution: Introduction: Inventory turnover ratio measures how well the company's effectiveness in…

Q: he management of Milque Corp. is considering the effects of various inventory-costing methods on its…

A: Introduction:- The following four inventory valuation methods used as follows under:- First-In,…

Q: Management of Tarry Company takes the position that under the lower-of-cost-or-market rule, the two…

A: In the lower of cost or market (LCM) inventory valuation method, the inventory of the company…

Q: A business uses a perpetual inventory system. During periods of rising prices, cost of goods sold…

A: In FIFO the earliest  goods ( beginning) will be sold first.

Q: Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending…

A: LIFO method last in first out so LIFO method take last cost of product into account so do not older…

Q: Retailers need merchandise to make sales. In fact, a retailer’s inventory is its biggest asset. Not…

A: Stock turnover rate is the rate which a business computes in order to determine and know about how…

Q: Assume that the ending inventory of a merchandising firm is overstated by $40,000. a. By how much…

A: The cost of goods sold formula is calculated by adding purchases for the period to the beginning…

Q: If ending inventory is overstated in the current fiscal year, what effect will this have on net…

A: The question is multiple choice question and related with overstated ending inventory. The ending…

Q: In a period of falling prices, the use of which inventory cost flow method would typically result in…

A: The inventory valuation is done at the end of the accounting period. Different techniques are…

Q: Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO…

A: In FIFO method  the opening  and earliest goods will be sold first.

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.