Titan Truck Parts, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM)
Question:
Titan Truck Parts, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Titan Truck Parts, Inc., has the following account balances at December 31, 2016, prior to releasing the financial statements for the year:
The accountant for Titan Truck Parts, Inc., has determined that the replacement cost (current market value) of the ending inventory as of December 31, 2016, is $53,600.
Requirements
1. Which accounting principle or concept is most relevant to Titan Truck Parts, Inc.’s decision to utilize LCM?
2. What value would Titan Truck Parts, Inc., report on the balance sheet at December 31, 2016, for inventory?
3. Prepare any adjusting journal entry required from the information given?
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Req 1 Conservatism is the reason to account for inventory a...View the full answer
