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Unformatted text preview: Chapter 5: Lower Cost or Market:- Market= replacement cost- Computing the lower of cost or market o Units x Cost OR Market (whichever number is lower) o Computing the lower of cost or market for ending inventory as a whole Sum of Units x Cost or Market- Consistency Principle: have to use same inventory method in each period o Unless an inventory change can occur if it improves your finances Inventory Valuation Methods: FIFO o First In, First Out A company reports the following beginning inventory and purchases for the month of January. On January company sells 360 units.- Units Unit Cost Beginning inventory on January 1 320 $ 6.00 Purchase on January 9 85 6.40 Purchase on January 25 110 6.60 - What is the cost of the 155 units that remain in ending inventory at January 31, assuming costs are assigned perpetual inventory system and use of FIFO?- 360- 320= 40- 85- 40= 45- 45 x 6.4= 288- 110 x 6.6= 726- 726 + 288= 1014 dollars LIFO- Last in, first out A company reports the following beginning inventory and purchases for the month of January. On January 26A company reports the following beginning inventory and purchases for the month of January....
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- Fall '08