Question

Switzer, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date, each computer has a net realizable value of $400. What value should Switzer, Inc., report for the computers at the end of the year?

Answer 1

The $3,200 should Switzer, Inc., report for the computers at the end of the year

Step-by-step explanation:

For reporting the inventory in the financial statement, the inventory should be recorded at the cost or net realizable value which ever is lower.

So, in the given question, the cost of inventory is $600 each and the net realizable value is $400 each

So, the lesser would be $400 each.

Therefore, the total value of inventory at the end of the year equal to

= Price per computer × number of computers

= $8 × 600

= $3,200