Lower of cost or marketleaders company has five products in

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Reference no: EM13379827

Lower of cost or market

Leaders Company has five products in its inventory. Information about the December 31,2011, inventory follows.

Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price

A 1,000 $10 $12 $16

B 800 15 11 18

C 600 3 2 8

D 200 7 4 6

E 600 14 12 13

The selling cost for each product consists of a 15 percent sales commission. The normal profit percentage for each product is 40 percent of the selling price.

Required:

1-Determine the balance sheet inventory carrying value at December 31,2011 assuming the LCM rule is applied to individual products.

2-Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to the entire inventory, Also, assuming that Leaders recognizes an inventory write -down as a separate income statement item, determine the amount of the loss.

Reference no: EM13379827

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