Issue $5$: Inventory Included in BCE$$s inventory $($valued using the LIFO method$)$ are the following: $$ $$100,000($cost$)$ of computers which manufacturers ceased producing in the middle of $20$X$3.$ Although the wholesale value of these computers now is only about $$60,000,$ the retail value $($if they could all be sold today, which they can$$t be$)$ is approximately $$110,000.$ The selling costs of these specific machines are considered negligible, and a normal profit margin is approximately $25\%$ of sales price. The retail market is $$thin$$ and it will take some time to sell the computers. Management intends to sell all of these computers at retail and believes that the retail value of these computers is likely to decrease at an average rate of $5$ percent every quarter for the next year; thus, on average a computer with a retail value of $$1,000$ on $12/31/$X$3$ would have an average retail value of $$950$ and $$900$ during the first two quarters of $20$X$4,$ respectively. Management believes that the computers will be sold within the next year as follows$--$first quarter $40\%$ of inventory, second quarter $35\%,$ third quarter $20\%,$ and fourth quarter $5\%$ at market values at the time of sale. These projections seem reasonable. It is currently February $15$ and you note that sales are right on schedule and that retail prices have dropped a bit from yearend, as projected. $$ Because of discontinuance of the above computers, many suppliers of parts for these computers have chosen to quit manufacturing the items with the result that shortages are occurring. As a result, BCE$$s $$50,000$ inventory of parts for these machines has increased in value and would now cost $$65,000$ to replace $($its retail value is $$110,000).$ Historically, the normal profit margin on sales of parts is $40\%$ of sales price. Also, management has pointed out to you that computers in inventory that don$$t sell could be used for parts. But management does not anticipate the need to do this. $$ Historically, BCE $($and competitors$)$ have in general separated Computers from Parts when calculating the lower of cost or market for inventory. $5$ Does BCE need to record an inventory writedown to reflect a lower of cost or market value? If so$,$ how much?