Item # 2530. Item # 2533

Original cost $12,000 $15,000

Selling price 15,000 26,000

Estimated selling costs 5,000 10,000

Replacement cost 13,000 15,000

Normal profit margin 1,500 1,000

The appropriate carrying value for the entire inventory when applying the LCM rule using the net realizable value on an item-by-item basis would be

a) $25,000.

b) $26,000.

c) $27,000.

d) $28,000.

2)Tamarack Co. prepares its estimate of LCM using the net realizable value. Inventory item 101 cost $45 and its current replacement cost is $50. The item is currently selling in the market for $55 and selling costs are estimated to be $6. Tamarack expects to earn a profit of $4 on the sale of this item. In its year-end financial statements, Tamarack Co. should value this item at

a) $50.

b) $45.

c) $49.

d) $55.