Valuing Inventory at Lower-of-Cost-or-Market Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of the selling price, and gross profit is estimated to be 25% of the selling price. Determine the value of inventory applying the lower-of-cost-or-market rule to each individual inventory item. Note: Round each amount to the nearest dollar. #1 Estimated selling price: $10 Original cost (LIFO): $60 Replacement cost: $120 Inventory at the lower-of-cost-or-market: Answer #2 Estimated selling price: $20 Original cost (LIFO): $80 Replacement cost: $130 Inventory at the lower-of-cost-or-market: Answer #3 Estimated selling price: $30 Original cost (LIFO): $90 Replacement cost: $140 Inventory at the lower-of-cost-or-market: Answer #4 Estimated selling price: $40 Original cost (LIFO): $100 Replacement cost: $150 Inventory at the lower-of-cost-or-market: Answer #5 Estimated selling price: $50 Original cost (LIFO): $110 Replacement cost: $160 Inventory at the lower-of-cost-or-market: Answer
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NRV is calculated as the estimated selling price minus the cost of disposal. Show more…
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