Question
Lower-of-cost-or-market. The December 31, 2014 inventory of Gwynn Company consisted of four products, for which certain information is provided below. Original Replacement Estimated Expected Normal
Lower-of-cost-or-market.
The December 31, 2014 inventory of Gwynn Company consisted of four products, for which certain information is provided below.
|
| Original | Replacement | Estimated | Expected | Normal Profit |
| Product | Cost | Cost | Disposal Cost | Selling Price | on Sales |
| A | $25.00 | $22.00 | $6.50 | $37.50 | 20% |
| B | $42.00 | $40.00 | $12.00 | $48.00 | 25% |
| C | $120.00 | $115.00 | $25.00 | $160.00 | 30% |
| D | $16.00 | $15.80 | $3.00 | $22.00 | 10% |
Instructions
Using the lower-of-cost-or-market approach applied on an individual-item basis, compute the inventory valuation that should be reported for each product on December 31, 2014.
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Contemporary Auditing
Authors: Michael C. Knapp
10th edition
978-1285066608, 128506660X, 978-1305445161, 1305445163, 978-1305970816
