Textbook Problem

Inventory Write-Down Stiles Corporation uses the FIFO cost flow assumption and is in the process of applying the LCNRV rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific data for each product are as follows:

Inventory Write-Down Use the information in E8-1. Assume that Stiles uses the LIFO cost flow assumption and is applying the LCM rule.

Required:

1. 1. What is the correct inventory value for each product?
2. 2. Next Level With regard to requirement 1, what effect does the imposition of the constraints on market value have on the inventory valuations?