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Question 1BE

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Intermediate Accounting (Kieso)
Found in: Page 474

Short Answer

Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical cost $190.00 $106.00 $53.00 Selling price 212.00 145.00 73.75 Cost to sell 19.00 8.00 2.50 Cost to complete 32.00 29.00 21.25 Determine the following: (a) the net realizable value for each item, and (b) the carrying value of each item under LCN

(a) Net realizable value per unit for Skis, Boots, and Parkas equals $161, $108, and $50, respectively.

(b) Carrying value per unit for Skis, Boots, and Parkas equals $161, $106, and $50, respectively.

See the step by step solution

Step by Step Solution

Calculate net realizable value for each item

(a) Net realizable value for each item is calculated as follows:

Skis

Boots

Parkas

Selling price

$212

$145

$73.75

Less: Cost to sell

19

8

2.50

Less: Cost to complete

32

29

21.25

Net Realizable Value

$161

$108

$50

Calculate carrying value of each item using LCNRV

(b) Carrying value of each item using LCNRV is calculated as follows:

Skis

Boots

Parkas

Historical Cost

$190

$106

$53

Net Realizable Value

161

108

50

Carrying Value as per LCNRV

$161

$106

$50

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