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Question - Adrianna Lopez of success system is evaluating her inventory to determine whether it must be adjusted based on lower of cost or market rules. Lopez has three different types of software in her inventory and the following information is available for each.
Office productivity.....3 units $76 cost $74 market
Desktop publishing....2 units 103 cost 100 market
Accounting............3 units 90 cost 96 market
1. Compute the lower of cost or market for ending inventory assuming Lopez applies the lower of cost or market rule to inventory as a whole. Must Lopez adjust the reported inventory value? Explain.
2. Assume that Lopez had instead applied the lower of cost or market rule to each product in inventory. Under this assumption, must Lopez adjust the reported inventory value? Explain.
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