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B-08.08 Problem

# B-08.08 Problem - (a What unit value should be attached to...

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B-08.08 Carson's Camera Store has a number of video recording cameras in stock. All units are priced to provide a normal profit margin of \$150. Some of these units are quite old. Carson's has concluded that some "lower-of-cost-or-market" adjustments may be needed, and has gathered the following unit pricing data: Beta CamCorder, \$900 cost, \$950 replacement cost, \$300 selling price VHS CamCorder, \$800 cost, \$250 replacement cost, \$500 selling price DVD CamCorder, \$400 cost, \$375 replacement cost, \$400 selling price Blu-Ray CamCorder, \$600 cost, \$750 replacement cost, \$800 selling price
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Unformatted text preview: (a) What unit value should be attached to each type of camera, assuming item-by-item application of the lower-of-cost-or-market rule? (b) Assuming an item-by-item application of the lower-of-cost-or-market rule, what journal entry is needed to reduce the Beta CamCorder? 11 such units remain in stock. (c) As a general rule, is the item-by-item approach required? Is the item-by-item approach the most "conservative?" (d) If an item of inventory is written down, but subsequently recovers in value during a subsequent year, can it be written back up?...
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