You are a plant accountant for Kelly Corp. You have been asked to draft a brief issues memo ("to the files") documenting the accounting for the following issue. Kelly Corp has leased a mine from which it recently extracted 1,000 kilograms of bauxite (a mineral that can be used to make aluminum). Kelly Corp plans to sell the bauxite to aluminum manufacturers. Kelly Corp is analyzing whether its bauxite inventory can be carried at its selling price per ASC 330-10-35-16(b).

Assume that quoted market prices are generally available for bauxite, and that the market for bauxite is active. Using the standard memo format, analyze whether all necessary conditions are met for the accounting treatment proposed. If assumptions are needed to fully evaluate the guidance, identify those assumptions in your analysis. For this particular memo, you are not required to present alternative treatments; assume for this issue that you have solely been asked to document whether the conditions in ASC 330-10-35-16(b) are met.

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MEMORANDUM To Kelly Corp From Plant Accountant Date 04 082018 Subject Stating i nventory of Bauxite at selling price as per criterial specified in Acc... View the full answer