Question

Inventory write-down The following information is taken from Aden Company's records: Product Group Units Cost/Unit Market/Unit 700 $1.00 $0.80 B 1 300 1.50 1.55 C 2 200 4.90 5.15 D2 100 6.50 6.40 E 3 80 25.00 24.60 Required: What is the correct inventory value if the company applies the LCNRV rule to each of the following? Round your answers to the nearest cent. a. Individual items Product A Product B Product C $_1560 450 980 640 → 1,968 → $ 4,598 Product D Product E Total inventory value

Answer 1

| Ans! Valuation of inventory as per LCNRL (rie Lower of cost and wet Realizable valu Individual items i L (a) Particulans Units cost unit Product A 700 $1.00 marke unit $0.80 Inventory Product B 300 $ 9.50 $ 1.55 Product c 200 $4.90 | $ 5.15 value of $ 560 toox0.80) $ 45o $1.50x300) $ 980 [$4.90826 | $ 640 $6.40X100 I $ 1968 (80 x $29.60) Product D I loo $6.50 $ 6.40 Prodect G 80 $25.00 $29.60 Total value of inventones |$ 4598 to of cost and- Inventonies are valued at lower net realizable value (LCARU)

(6) Group of items! Group 1 = Total units = 700+30o = 1000 units (ATB LENRV = 1+1.50 . A & B cost price per unit = $2.50 (1+1:50) market price = 2.35 (0.804 1.55) market price is lower than cost price. value of inventory in Group 1 as per LCNRV = 1000 units X $2.35 Cinventory is valued = $ 2350 aspen LCNRY Group. 2: Total units = 200tlou = 300 units (cto) t = $11.40 + 6.50 market/ unit $11.55 (5.15 +6.40 Here cost price per unit is lower than market price so inventong is valued as per Cast price. value of Inventony = 300 units X $11.40 on = $3920 On : $3420. - Group. 3 80x824.60 = $1,968 units

162 Group of items : Group 1 Group, 2 group. 3 Total $ 2350 $ 3420 $ 1968 $ 7,738 1 Inventones as a whole l'.l Individual and Group is $ 12336 (84598 +$7738).

Answer 2

										LCNRV by:
Product	Group	Units	Cost/unit	Market/unit		Total cost		Market value		Individual		Group		Total inventory
A	1	700	$    1.00	$        0.80		$   700.00		$       560.00		$   560.00
B	1	300	$    1.50	$        1.55		$   450.00		$       465.00		$   450.00
					Total group	$ 1,150.00		$    1,025.00				$ 1,025.00
C	2	200	$    4.90	$        5.15		$   980.00		$    1,030.00		$   980.00
D	2	100	$    6.50	$        6.40		$   650.00		$       640.00		$   640.00
					Total group	$ 1,630.00		$    1,670.00				$ 1,630.00
E	3	80	$  25.00	$      24.60	Total group	$ 2,000.00		$    1,968.00		$ 1,968.00		$ 1,968.00
					Inventory total	$ 4,780.00		$    4,663.00		$ 4,598.00		$ 4,623.00		$        4,663.00