The Eserine Wood Corporation manufactures desks. Most of the company's desks are standard models that are sold
Question:
The 2014 catalogue was in effect through November 2014, and the 2015 catalogue is effective as of December 1, 2014.
All catalogue prices are net of the usual discounts. Generally, the company tries to obtain a 20% gross margin on the selling price and it has usually been successful in achieving this.
Instructions
(a) Assume that the company has adopted a lower of FIFO cost and net realizable value approach for the valuation of inventories and applies it on an individual inventory item basis. At what total inventory value will the desks appear on the company's December 31, 2014 balance sheet?
(b) Explain the rationale for using the lower of cost and market rule for inventories.
(c) Explain the impact if inventory was valued at lower of cost or net realizable value on a total basis.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,