Novelli's Nursery has developed the following data for lower-of-cost-or-market valuation for its products: The normal profit margin

Question:

Novelli's Nursery has developed the following data for lower-of-cost-or-market valuation for its products:

The normal profit margin on all trees is 20% of selling price and disposal costs are 10% of selling price.

Selling Cost to

Price Cost Replace

Broad leaf trees

Ash $ 1,800 $1,000 $ 800

Beech 2,200 1,600 1,400

Needle leaf trees

Cedar 2,500 1,750 1,800

Fir 3,600 3,350 3,200

Fruit trees

Apple 1,800 1,400 1,300

Cherry 2,300 1,800 1,700

Required: Determine the balance sheet inventory carrying value assuming the LCM rule is applied to individual trees.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...