Question
I. Vail Ski, Inc. has developed the following data for its inventory. Determine the reported inventory value assuming the lower of cost or market and
I. Vail Ski, Inc. has developed the following data for its inventory. Determine the reported inventory value assuming the lower of cost or market and lower of cost or net realizable value rules are applied to individual products. Show your computations. If not, no credit.
| Skis |
| Boots |
| Apparel |
| Supplies |
| |||||||||||||
Selling price | $ | 180,000 |
|
| $ | 150,000 |
|
| $ | 120,000 |
|
| $ | 60,000 |
| ||||||
Cost |
| 128,000 |
|
|
| 133,000 |
|
|
| 90,000 |
|
|
| 48,000 |
| ||||||
Replacement cost |
| 120,000 |
|
|
| 130,000 |
|
|
| 110,000 |
|
|
| 50,000 |
| ||||||
Sales commission |
| 10 | % |
|
| 10 | % |
|
| 10 | % |
|
| 10 | % | ||||||
Normal profit |
| 20 | % |
|
| 20 | % |
|
| 15 | % |
|
| 15 | % | ||||||
*Sales commission and normal profit are % of selling price.
1) Lower of cost or net realizable value (LCNRV)
Skis:
Boots:
Apparel:
Supplies:
2) Lower of cost or market (LCM)
Skis:
Boots:
Apparel:
Supplies:
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