{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

SolutionsHW-CH9

# SolutionsHW-CH9 - Exercise 9-1(1(2 Ceiling(3 Floor(4...

This preview shows pages 1–6. Sign up to view the full content.

Exercise 9-1 (1) (2) (3) (4) (5) Product RC Ceiling NRV (*) Floor NRV-NP (**) Designated Market Value [Middle value Cost Per Unit Inventory Value [Lower of (4) and (5)] 1 \$18 \$ 34 \$29 \$29 \$20 \$20 2 85 80 50 80 90 80 3 40 60 48 48 50 48 * Selling price less disposal costs. ** NRV less normal pr ofit margin Exercise 9-2 The designated market value according to IAS No. 2 always is net realizable value. Inventory valuation for the three products would be as follows: Product NRV Cost Lower of Cost or Market 1 \$34 \$20 \$20 2 80 90 80 3 60 50 50 Product 3 would be valued at \$50 under IAS No. 2 , but \$48 according to U.S. GAAP. The inventory values of the other two products would be the same under U.S. and the international standard.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Exercise 9-3 Requirement 1 (1) (2) (3) (4) (5) Product RC Ceiling NRV Floor NRV-NP (NP= 25% of cost) Designated Market Value [Middle value Cost Inventory Value [Lower of (4) and (5)] 101 \$110,000 \$100,000 \$70,000 \$100,000 \$120,000 \$100,000 102 85,000 110,000 87,500 87,500 90,000 87,500 103 40,000 50,000 35,000 40,000 60,000 40,000 104 28,000 50,000 42,500 42,500 30,000 30,000 Totals \$300,000 \$257,500 The inventory value is \$257,500 . Requirement 2 Loss from write-down of inventory: \$300,000 - 257,500 = \$42,500
Exercise 9-4 The designated market value according to IFRS always is net realizable value. Product Cost NRV LCM 101 \$120,000 \$100,000 \$100,000 102 90,000 110,000 90,000 103 60,000 50,000 50,000 104 30,000 50,000 30,000 Totals \$300,000 \$270,000 The inventory value is \$270,000 so the required write-down is \$30,000 (\$300,000 – 270,000). The following journal entry accomplishes the write-down: Inventory write-down expense 30,000 Inventory valuation allowance 30,000

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Exercise 9-5 (1) (2) (3) (4) (5) Product RC Ceiling NRV (*) Floor NRV-NP (**) Designated Market Value [Middle value Cost Per Unit Inventory Value [Lower of (4) and (5)] A \$35 \$52 \$34 \$35 \$40 \$35 B 70 86 56 70 80 70 C 55 70 46 55 40 40 D 70 112 73 73 100 73 E 28 26 17 26 20 20 * Selling price less disposal costs. Disposal costs = 10% of selling price + 5% of cost. ** NRV less normal profit margin
Exercise 9-6 Requirement 1 FASB ASC 330–10–35–1: “Inventory–Overall–Subsequent Measurement.” A departure from the cost basis of pricing the inventory is required when the utility of the goods is no longer as great as their cost. Where there is evidence that the utility of goods, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the difference shall be recognized as a loss of the current period. This is generally accomplished by stating such goods at a lower level commonly designated as market. Requirement 2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 42

SolutionsHW-CH9 - Exercise 9-1(1(2 Ceiling(3 Floor(4...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online