Question
Assume Yellow Company uses the lower of cost or market (LCM) and has two products in its inventory. The normal profit margin is 25% of
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Assume Yellow Company uses the lower of cost or market (LCM) and has two products in its inventory. The normal profit margin is 25% of Total Cost. Information about the December 31, 2021, inventory is as follows:
Product Total Cost Total Replacement Cost Total Net Realizable Value 101 120,000 98,000 100,000 102 90,000 100,000 110,000
Assume Yellow applies LCM at the product-level. How much should Yellow write down inventory on December 31, 2021?
a. $ 0
b. $ 18,000
c. $ 12,000
d. $ 22,000
e. None of the options
Assume Yellow Company uses the lower of cost or market (LCM) and has two products in its inventory. The normal profit margin is 25% of Total Cost. Information about the December 31, 2021, inventory is as follows:
| Product | Total Cost | Total Replacement Cost | Total Net Realizable Value |
| 101 | 120,000 | 98,000 | 100,000 |
| 102 | 90,000 | 100,000 | 110,000 |
Assume Yellow applies LCM at the product-level. How much should Yellow write down inventory on December 31, 2021?
| a. | $ 0 | |
| b. | $ 18,000 | |
| c. | $ 12,000 | |
| d. | $ 22,000 | |
| e. | None of the options |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
