B-08.08 Problem

B-08.08 Problem - (a What unit value should be attached to each type of camera assuming item-by-item application of the lower-of-cost-or-market

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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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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.

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