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LECTURE NOTES: Inventory (Ch. 9)Refer back to Example 2:What journal entry would Horton’s need to make following its lower of cost and NRV analysis, assuming that Horton’s applies it on an individual item basisand considers its write-downs to be common, typical events?What is the journal entry if Horton’s applies lower of cost and NRV on a categorical basisand considers its write-downs to be unusual events?Refer back to Castle Brands’ financial statements from Example 1…When Castle Brands records inventory write-downs, does it reduce the value of inventorydirectly or use an allowance account?Do you think write-downs are considered to be common/usual or uncommon/unusual events at Castle Brands? How can you tell?What journal entry do you think Castle Brands made during the year ended 3/31/18 to write its inventory down to the lower of cost and NRV (assuming that the company did not write-off any of its allowance account due to disposal of obsolete inventory)?6
LECTURE NOTES: Inventory (Ch. 9)What if a Company Uses LIFO or the Retail Inventory Method?7