Presented below is information related to Larkspur Inc.'s inventory, assuming Larkspur uses lower-of-LIFO cost-or-market. (per unit) Skis Boots Parkas...

 

Transcribed Image Text:

Presented below is information related to Larkspur Inc.'s inventory, assuming Larkspur uses lower-of-LIFO cost-or-market. (per unit) Skis Boots Parkas Historical cost $224.20 $125.08 $62.54 Selling price 250.16 171.10 87.03 Cost to distribute 22.42 9.44 2.95 Current replacement cost 239.54 123.90 60.18 Normal profit margin 37.76 34.22 25.08 Determine the following: (a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis. Ceiling Limit 24 Floor Limit $4 (b) The cost amount that should be used in the lower-of-cost-or-market comparison of boots. The cost amount %24 (c) The market amount that should be used to value parkas on the basis of the lower-of-cost-or-market. The market amount

Answer rating: 100% (QA)

a Skis Ceiling Selling price 250 16 less cost to distribute 22 42 Ceiling 227 74 answer Floor NRV 227 74 less normal profit margin 37 76 Floor 189 98 answer b Boots Ceiling Selling price 171 1 less cost to distribute 9 44 Ceiling 161 66 Floor NRV 161 66 less normal profit margin 34 22 Floor 127 44 Cost Replacement ceiling Floor MV LCM 125 08 123 9 161 66 127 44 127 44 125 08 Answer 125 08 c Parkas Ceiling Selling price 87 03 less cost to distribute 2 View the full answer