SLR Corporation has 800 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:

	Product 1				Product 2
Cost		$	54			$	38
Replacement cost			52				30
Selling price			74				40
Selling costs			10				8
Normal profit			14				12

Determine the carrying value of SLRs inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax income effect of the LCM adjustment?

Determine the carrying value of SLRs inventory assuming that the lower of cost or market (LCM) rule is applied to individual products.

Product	Cost	Market	Per Unit Inventory Value	Unit	Cost	Lower of Cost or Market
1				800
2				800		24,000
			Cost		$0
			Inventory value			$24,000

What is the before-tax income effect of the LCM adjustment?

Before-tax income effect