27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Lower-of-cost-or-market method

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item, as shown in Exhibit 9.




Cost per


Market Value per Unit

(Net Realizable Value)

Raven 10 1,200 $115 $112
Dove 23 6,500 17 22

To determine

Lower-of-cost-or-market value:

The lower-of-cost-or-market value is a method which requires the reporting of the ending merchandise inventory in the financial statement of a company, at its current market value (net realizable value) or at its historical cost price, whichever is less.

To determine: value of inventory based on lower of cost or market price.


The table showing inventory value is prepared as follows:

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