Magic Carpets Inc. sells a full line of area rugs, from top quality to bargain basement. Economic conditions have hit the textile industry, and Magic Carpets accountant is concerned that its rug inventory may not worth the amount Magic paid for it. Information about three lines of rugs is found below:

	Cost	Sales Price	Cost to Sell	Number in inventory
High Flyers	$230	$250	$40	80
Midflight	150	220	25	125
Under the Radar	100	110	20	165

1. Determine market value for each type of rug.
2. Determine lower-of-cost-or-market for each type of rug.
3. Determine if Magic Carpets has suffered a loss of value on its inventory, and if so, what the amount of loss is.

Answer rating: 100% (QA)

To determine the market value and lowerofcostormarket LCM for each type of rug well com... View the full answer