Homework Answers
Solution:
Replacement cost = $96
Net realizable value = Selling price - cost of disposal = $100 - $6 = $94
NRV - Normal profit = $94 - ($100*40%) = $94 - $40 = $54
Market Value = Middle Value of above three = $94 per unit
Cost per unit = $97
per unit amount to be reported = Lower of Cost or market = Lower of $97 or $94 = $94
Hence second option is correct.
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