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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

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.

Item

Inventory

Quantity

Cost per

Unit

Market Value per Unit

(Net Realizable Value)

JFW1 6,330 $10 $11
SAW9 1,140 36 34

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.

Explanation

The table showing inventory value is prepared as follows:

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