Chapter 9 assignments and solutions

Chapter 9 assignments and solutions - Prior to year-end,...

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CHAPTER 9 HOMEWORK - SOLUTIONS Ex. 9-142 - Lower-of-cost-or-market. The December 31, 2010 inventory of Gwynn Company consisted of four products, for which certain information is provided below. Replacement Estimated Expected Normal Profit Product Original Cost Cost Disposal Cost Selling Price on sales A $25.00 $22.00 $6.50 $40.00 20% B $42.00 $40.00 $12.00 $48.00 25% C $120.00 $115.00 $25.00 $190.00 30% D $18.00 $15.80 $3.00 $26.00 10% Instructions Using the lower-of-cost-or-market approach applied on an individual-item basis, compute the inventory valuation that should be reported for each product on December 31, 2010. Solution 9-142 Lower-of- Designated cost-or- Product Ceiling Floor Market Cost market A $40.00 – $6.50 $33.50 – $8.00 = $33.50 = $25.50 $25.50 $25.00 $25.00 B $48.00 – $12.00 $36.00 – $12.00 = $36.00 = $24.00 $36.00 $42.00 $36.00 C $190.00 – $25.00 $165.00 – $57.00 = $165.00 = $108.00 $115.00 $120.00 $115.00 D $26.00 – $3.00 $23.00 – $2.60 = $23.00 = $20.40 $20.40 $18.00 $18.00 Ex. 9-149(M ) - Purchase commitments
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Unformatted text preview: Prior to year-end, Smith Company has a long-term non-cancellable commitment to purchase a certain raw material at a total price of $475,000. At year-end the price for these materials had dropped to $435,000. What journal entry (if any) would the company record at year end? Solution 9-149(M) Dr Unrealized inventory holding loss (income statement 40,000 Cr Estimated liability for inventory purchases 40,000 IFRS QUESTIONS True / False 1. iGAAP permits an entity to reverse inventory write-downs in certain situations, whereas U.S. GAAP does not. 2. iGAAP defines market as replacement cost subject to certain constraints. 3. iGAAP uses a ceiling to determine market. 4. Similar to U.S. GAAP, certain agricultural products and mineral products can be reported at net realizable value using iGAAP. 5. iGAAP records market in the lower-of-cost-or-market differently than U.S. GAAP. Answers to True/False 1. True 2. False 3. False 4. True 5. True...
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This note was uploaded on 11/17/2010 for the course ACC ACC 305 taught by Professor Rogero during the Spring '10 term at University of Dayton.

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Chapter 9 assignments and solutions - Prior to year-end,...

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