Englehart Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The following inventory data is available for the month of March.

In addition to the above information, due to a downturn in the economy that has hit Englehart’s commercial customers especially hard, Englehart expects commercial pump prices from March 31 onward to be considerably different (and lower) than at the beginning of and during March. Englehart has developed the following additional information.

Englehart uses the FIFO accounting method.

Accounting

(a) Determine the dollar amount that Englehart should report on its March 31 statement of financial position for inventory. Assume Englehart applies LCNRV at the individual-product level.

(b) Repeat part (a) but assume Englehart applies LCNRV at the major-group level. Englehart places both commercial and residential pumps into the same (and only) group.

Analysis

Which of the two approaches above (individual-product or major-group level) for applying LCNRV do you think gives the financial statement reader better information?

Principles

Assume that during April, the net realizable value of commercial pumps rebounds to $1,060. Briefly describe how Englehart’s April financial statements changed with respect to its inventory remaining from March 31 under IFRS.

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Units Value per Unit Total Residential Pumps Inventory at Feb. 28: 200 $ 400 $ 80,000 Purchases: March 10 500 $ 450 $225,000 March 20 400 $ 475 $190,000 March 30 Sales: 300 $ 500 $150,000 March 15 500 $ 540 $270,000 March 25 400 $ 570 $228,000 Inventory at Mar. 31: 500 Commercial Pumps Inventory at Feb. 28: 600 $ 800 $480,000 Purchases: March 3 600 $ 900 $540,000 March 12 300 $ 950 $285,000 March 21 500 $1,000 $500,000 Sales: March 18 900 $1,080 $972,000 March 29 600 $1,140 $684,000 Inventory at Mar. 31: 500