1) Apogee Group purchases for resale 2,000 calculators for $16 each. At year end, the estimated selling price is $19, and the disposal cost is $4. If Apogee uses LCNRV costing by item, at what amount will the calculators be reported on the balance sheet?

a) $40,000

b) $30,000

c) $26,000

d) $24,000

e) $32,000

f) $34,000

2) Applying LCNRV, ABC Company determines that, as of December 31, merchandise that originally cost $46,300 is now $43,500 at market. This is a temporary decline due to the seasonal nature of the merchandise. ABC Company should:

make an entry to decrease the inventory account
		make an entry to reduce retained earnings
		make no entry
		make an entry to increase cost of goods sold

3) Lower of Cost or Net Realizable Value (LCNRV) can be applied by item, by group, or by the inventory as a whole. Whichever method is chosen must be used year after year

a) True

b) False

4) Applying LCNRV on December 31, 20X3, King Company determined that merchandise that originally cost $46,300 was worth $43,500 at NRV. Early in 20X4, the NRV of King Company's inventory unexpectedly increased to $47,500. If the original credit to write-down the inventory in 20X3 was to the Inventory account, what should King Company do in early 20X4:

	Make an entry to recognize a $2,800 recovery.
		Make no entry, but disclose the loss in a note accompanying the financial statements.
		Make no entry and make no disclosure.
		Make an entry to recognize a $4,000 recovery.
		Make an entry to recognize a $1,200 gain.

5)

A physical inventory of DEF Electronics taken at December 31 reveals the following data:

ITEM	UNITS ON HAND	COST PER UNIT	NRV PER UNIT
Audio Equipment
Receivers	345	$90	$98
CD Players	260	111	100
MP3 Players	326	86	95
Wireless Speakers	204	52	41
Video Equipment
Handheld LCDs	480	$150	$125
VCRs	291	93	84
Camcorders	212	310	322
Car Audio Equipment
Satellite Radios	185	$70	$84
CD/MP3 Radios	170	97	105

Calculate LCNRV by item:

$280,702

$289,010

$273,054

$292,777

$285,242

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