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    Home Work Intermediate Ii

    Uploaded by

    Sarah Dzuriyati Samiyah
    1. The document provides examples and instructions for applying the lower-of-cost-or-net realizable value (LCNRV) approach to inventory valuation on an individual item basis. 2. Students are asked to use the LCNRV approach to value inventory for several companies based on given cost and estimated selling price data for individual products. 3. Journal entries are required to record inventory under both the LCNRV approach and at cost, with an analysis of which method provides a higher net income.

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    Home Work Intermediate Ii

    Uploaded by

    Sarah Dzuriyati Samiyah
    103 views2 pages
    1. The document provides examples and instructions for applying the lower-of-cost-or-net realizable value (LCNRV) approach to inventory valuation on an individual item basis. 2. Students are asked to use the LCNRV approach to value inventory for several companies based on given cost and estimated selling price data for individual products. 3. Journal entries are required to record inventory under both the LCNRV approach and at cost, with an analysis of which method provides a higher net income.

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    HOME WORK INTERMEDIATE II

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    1. The document provides examples and instructions for applying the lower-of-cost-or-net realizable value (LCNRV) approach to inventory valuation on an individual item basis. 2. Students are asked to use the LCNRV approach to value inventory for several companies based on given cost and estimated selling price data for individual products. 3. Journal entries are required to record inventory under both the LCNRV approach and at cost, with an analysis of which method provides a higher net income.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    103 views2 pages

    Home Work Intermediate Ii

    Uploaded by

    Sarah Dzuriyati Samiyah
    1. The document provides examples and instructions for applying the lower-of-cost-or-net realizable value (LCNRV) approach to inventory valuation on an individual item basis. 2. Students are asked to use the LCNRV approach to value inventory for several companies based on given cost and estimated selling price data for individual products. 3. Journal entries are required to record inventory under both the LCNRV approach and at cost, with an analysis of which method provides a higher net income.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    HOME WORK INTERMEDIATE II

    1. Lower-of-cost-or-net realizable value.


    Determine the proper unit inventory price in the following independent cases by applying the
    lower of cost or net realizable value rule. Circle your choice.
    1 2 3 4 5
    Cost $80 $105 $120 $60 $72
    Sales value 100 130 160 65 80
    Cost to complete 18 19 21 4 6
    Cost to sell 7 10 12 2 5

    2. Lower-of-cost-or-net realizable value.


    The December 31, 2010 inventory of Gwynn Company consisted of four products, for which
    certain information is provided below.
    Estimated Expected Estimated
    Product Original Cost Completion Cost Selling Price Cost to sell
    A $25 $6 $40 $4
    B $42 $12 $58 $8
    C $120 $25 $150 $15
    D $18 $3 $26 $2

    Instructions
    Using the lower-of-cost-or-net realizable value approach applied on an individual-item basis,
    compute the inventory valuation that should be reported for each product on December 31,
    2010.

    3. LCNRV
    Pinkel Company uses the LCNRV method, on an individual-item basis, in pricing its inventory
    items. The inventory at December 31, 2011, consists of products D,E,F,G,H, and I, Relavant
    per-unit data for these products appear below.
    Item Item Item Item Item Item
    D E F G H I
    Estimated selling price €180 €165 €140 €135 €165 €135
    Cost 110 120 120 120 75 54
    Cost to complete 45 45 35 50 45 45
    Selling costs 15 27 15 30 15 30

    Instructions
    Using the LCNRV rule, determine the proper unit value for statement of financial position
    reporting purposes at December 31, 2011, for each of the inventory items above.

    4. LCNRV—Journal Entries
    Dover Company began operations in 2010 and determined its ending inventory at cost and at a
    LCNRV at December 31, 2010, and December 31, 2011. This information is presented below.
    Cost Net Realizable Value
    12/31/10 £520,000 £485,000
    12/31/11 615,000 585,000

    Instructions
    (a) Prepare the journal entries required at December 31, 2010, and December 31, 2011,
    assuming that the inventory is recorded at LCNRV, using a perpetual inventory system
    and the cost-of-goods-sold method.
    (b) Prepare the journal entries required at December 31, 2010, and December 31, 2011,
    assuming that the inventory is recorded at cost, using a perpetual system and the loss
    method.
    (c) Which of the two methods above provides the higher net income in each year?

    5. Valuation at Net Realizable Value.


    Akimora Dairy began operations on April 1, 2010, with purchase of 250 milking cows for
    ¥8,500,000. It has completed the first month of operations and has the following information for
    its milking cows at the end of April 2010 (000 omitted).
    Milking cows
    Change in fair value due to growth and price changes* ¥(250,000)
    Decrease in fair value due to harvest (15,000)
    Milk harvested during April 2010 (at net realizable value) 90,000
    *Due to a very high rate of calving in the past month, there is a glut of milking cows on
    the market.

    Instructions
    (a) Prepare the journal entries for Akimora’s biological asset (milking cows) for the month of
    April 2010.
    (b) Prepare the journal entry for the milk harvested by Akimora during April 2010.
    (c) Akimora sells the milk harvested in April on the local milk exchange and receives
    ¥93,000.

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