Exercise 9-2 Lower of cost and net realizable value [LO9-1]

Tatum Company has four products in its inventory. Information about the December 31, 2016, inventory is as follows:

Product Total Costs Total net realizable value

101 $ 156,000 118,000

102 $ 108,000 128,000

103 78,000 68,000

104 48,000 68,000

Required: 1. Determine the book value of inventory at December 31, 2016, assuming the lower of cost and net realizable value rule is applied to individual products.

Product Costs NPV Inventory value

101

102

103

104

2. Assuming that Tatum reports an inventory write-down as a line item in the income statement, determine the amount of the loss.

Loss from write down on inventory=