ACCT Assignment 3

✓ LCM: $22,780

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9.

Commodity Inventory Quantity Unit Cost Price Unit Market Price

Buffal 35 $115 $120

Dakota 67 90  75

Frontier 8 300  280

Midwest  83   40   30

Rainbow 100   90   94

EXHIBIT 9 Determining Inventory at Lower of Cost or Market

   In Exhibit 9, Items A, B, C, and D could be viewed as a class of inventory items. If the lower-of-cost-or-market method is applied to the class, the inventory would be valued at $15,472, which is a market decline of $48 ($15,520 −$15,472). Likewise, if Items A, B, C, and D make up the total inventory, the lower-of-cost-or-market method as applied to the total inventory would be the same amount, $15,472.

(Warren 233-234)

Warren, Carl S. Survey of Accounting, 6th Edition. Cengage Learning, 02/2012. VitalBook file.