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Question 2BE

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Intermediate Accounting (Kieso)
Found in: Page 475

Short Answer

Floyd Corporation has the following four items in its ending inventory. Item Cost Net Realizable Value (NRV) Jokers $2,000 $2,100 Penguins 5,000 4,950 Riddlers 4,400 4,625 Scarecrows 3,200 3,830 Determine the following: (a) the LCNRV for each item, and (b) the amount of write-down, if any, using (1) an item-by-item LCNRV evaluation and (2) a total category LCNRV evaluation

The LCNRV for item-by-item basis equals $14,550, and per total category, it equals $14,600.

The written in case of item-by-item basis equals $50, and per total category, it equals $0.

See the step by step solution

Step by Step Solution

Calculation of LCNRV for item-by-item basis and total category basis

(a) (1 & 2) LCNRV is calculated as follows:

Item

Cost

NRV

LCNRV

Item-by-Item

Total Category

Jokers

$2,000

$2,100

$2,000

Penguins

5,000

4,950

4,950

Riddlers

4,400

4,625

4,400

Scarecrows

3,200

3,830

3,200

Total

$14,600

$15,505

$14,550

$14,600

Calculation of amount written down as per the item-by-item basis.

(b) (1)

Amount written down per item-by-item basis is calculated as follows:

Calculation of amount written down per total category basis

(b) (2)

Amount written down per total category basis is calculated as follows:

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