Question

StarCross Ltd. is a public com-pany incorporated in Alberta and traded on the Toronto Stock Exchange. In December 20X7, StarCross management decided that cost exceeded NRV for a significant portion of the inventory. Consequently, the company wrote the Class A inventory down from $ 700,000 to $ 300,000 and the Class B inventory down from $ 850,000 to $ 650,000. In June 20X8, the value of Class B inventory rose to $ 730,000. Half of the Class B was sold for $ 380,000 in November of that year. In March 20X9, the Class A inventory was sold in bulk for a price of € 200,000. At the time of the sale, € 1 = Cdn$ 1.70.

Required:
1. Prepare all entries, assuming that the direct writedown method is used for lower of cost or NRV.
2. Prepare all entries, assuming instead that the allowance method is used for lower of cost or NRV.



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  • CreatedFebruary 17, 2015
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