Bora Company uses the LCNRV method to evaluate inventory for financial reporting purposes. Information related to inventory
Question:
Bora Company uses the LCNRV method to evaluate inventory for financial reporting purposes. Information related to inventory at December 31, 2020 appears below.
Required
a) Determine the correct value to be reported for inventory on the Financial Position Statement applying LCNRV for each item individually. Prepare the necessary journal entry if needed using the loss method.
Item A | Item B | Item C | Total inventory |
LCNRV |
JOURNAL ENTRY | |||
DATE | ACCOUNT TITLES | DEBIT | CREDIT |
b) Determine the correct value to be reported for inventory on the Financial Position Statement applying LCNRV for inventory in total. Prepare the necessary journal entry if needed using the loss method.
Total inventory |
LCNRV |
JOURNAL ENTRY | |||
DATE | ACCOUNT TITLES | DEBIT | CREDIT |
c) What should the company do if during 2021 total NRV for inventory rises above total original cost?
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas