Question

On April 1, Robert LLC purchased two units of inventory, A and B. The cost of unit A was $665, and the cost of unit B was $580. On April 30, Robert LLC had not sold the inventory. The market value of unit A was now $680 while the market value of unit B was $495. The adjustment associated with the lower-of-cost-or-market method on April 30 will be:

Answer 1

Unit A - $665

Unit B - $495

Step-by-step explanation:

According to the accounting principles, the inventory is valued at cost or market value whichever is lower.

So, in the given case

The inventory cost of unit A should be recorded at $665 cost value because it is a lower value than the market value i.e. $680

And, The inventory cost of unit B should be recorded at $495 market value because it is a lower value than the historical cost i.e. $580