User Account

All Pages

What would have been the effect on ending inventory

Assignment Help Accounting Basics
Reference no: EM131117878

1. Lower-of-Cost-or-Market Ogala Corporation purchased a significant amount of raw materials inventory for a new product that it is manufacturing. Ogala uses the lower-of-cost-or-market rule for these raw materials. The replacement cost of the raw materials is above the net realizable value, and both are below the original cost. Ogala uses the average cost inventory method for these raw materials. In the last 2 years, each purchase has been at a lower price than the previous purchase, and the ending inventory quantity for each period has been higher than the beginning inventory quantity for that period.

(a) (1) At which amount should Ogala's raw materials inventory be reported on the balance sheet? Why?

(2) In general, why is the lower-of-cost-or-market rule used to report inventory?

(b) What would have been the effect on ending inventory and cost of goods sold had Ogala used the LIFO inventory method instead of the average-cost inventory method for the raw materials? Why? 

Reference no: EM131117878

Questions Cloud

Will mesa expect the pound to appreciate or depreciate : Using the information provided, will Mesa expect the pound to appreciate or depreciate in the future? Explain.
Description and accounting features of the method : The accounting theory underlying the treatment of net markdowns and net markups under the method.(AICPA adapted)
Invade nazi-occupied france : By then American factories were at full production, but the armed forces were not yet prepared to invade Nazi-occupied France and thus open a "second front" to relieve Russia.
How the international trade flows should initially adjust : Explain how the international trade flows should initially adjust in response to the changes in inflation (holding exchange rates constant). Explain how the international capital flows should adjust in response to the changes in interest rates (holdi..
What would have been the effect on ending inventory : What would have been the effect on ending inventory and cost of goods sold had Ogala used the LIFO inventory method instead of the average-cost inventory method for the raw materials? Why?
Japanese thrust eastward toward hawaii : The U.S. Navy had a distinct advantage once it had broken Japan's naval codes a few months after Pearl Harbor. At the Battle of the Coral Sea, Japan's southern advance was checked, and the Battle of ______________________ in June 1942 halted the J..
What is your available cash balance : Your book balance for cash is $811. You have an outstanding deposit of $210 and three outstanding checks totaling $316. What is your available cash balance?
How can the sports exports company use currency futures : How can the Sports Exports Company use currency futures contracts to hedge against exchange rate risk? Are there any limitations of using currency futures contracts that would prevent the Sports Exports Company from locking in a specific exchange rat..
What should sheryl conan do : Lower-of-Cost-or-Market The market value of Lake Corporation's inventory has declined below its cost.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd