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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Blue Corporation uses the FIFO cost flow assumption. Presented below is information related to Blue’s inventory:

Chapter 8, Problem 3RE, Blue Corporation uses the FIFO cost flow assumption. Presented below is information related to Blues

Determine (a) the net realizable value for each item and (b) the inventory value of each item using the lower of cost or net realizable value rule.

a.

To determine

Calculate the net realizable value for each of the products.

Explanation

NRV (Net Realizable Value): It refers to an estimated selling price that a company expects to collect in the form of cash from the customers by the sale of inventory. The value is reduced by the expected cost of completion, disposal and transportation. Sales commission and shipping costs are also included in the predictable cost.

Calculate the net realizable value for each of the product:

Details

Product 1Product 2Product 3
($)

b.

To determine

Calculate the inventory value for each of the product using the lower of cost or NRV approach.

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