What is the lower of cost and NRV rule? Why is it used?
Answer to relevant QuestionsWhy might it be difficult to actually determine the NRV of inventory when applying the lower of cost and NRV rule? Provide some examples of when determining NRV might be difficult.What is inventory turnover? What does it tell a stakeholder about how the entity is managing its inventory? What could be some reasons for a decreasing inventory turnover ratio? What could be some reasons for an increasing ...Why is it often necessary to use a cost formula for valuing inventory and determining cost of sales? Why can't the actual cost of the goods sold be used to calculate cost of sales in these situations? You are provided the following information about Kinistino Inc. (Kinistino) for November 2018. Assume that Kinistino uses a periodic inventory system and that during November the company sold 52,000 units of ...Frobisher Inc. (Frobisher) uses the lower of cost and NRV rule to value its inventory. Frobisher’s inventory on February 28, 2017 had a cost of $1,125,000 and a NRV of $1,035,000.Required:a. By how much should ...
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