Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
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Chapter 9, Problem 9.3E
Lower of cost or net realizable value
• LO9–1
Tatum Company has four products in its inventory. Information about the December 31, 2018, inventory is as follows:
Product Total | Cost Total | Net Realizable Value |
101 | $120,000 | $100,000 |
102 | 90,000 | 110,000 |
103 | 60,000 | 50,000 |
104 | 30,000 | 50,000 |
Required:
1. Determine the carrying value of inventory at December 31, 2018, assuming the lower of cost or net realizable value
(LCNRV) rule is applied to individual products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end
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[The following information applies to the questions displayed below.]
A company like Golf USA that sells golf-related inventory typically will have inventory items such as golf clothing and golf equipment. As technology advances the design and performance of the next generation of drivers, the older models become less marketable and therefore decline in value. Suppose that in the current year, Ping (a manufacturer of golf clubs) introduces the MegaDriver II, the new and improved version of the MegaDriver. Below are year-end amounts related to Golf USA’s inventory.
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Shirts
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410
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Chapter 9 Solutions
Intermediate Accounting
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