Question

isa Inc. uses the lower-of-cost-or-net-realizable-value (LCNRV) basis for its inventory. The following data are available at December 31 Units Cost/Unit NRV/Unit Cameras Minolta 6 $171 $166 Canon 7 149 159 Light Meters Vivitar 15 121 118 Kodak 11 122 135 What amount should be reported on Lisa's financial statements, assuming the lower-of-cost-or-net-realizable-value rule is applied

Answer 1

Lisa Inc.

The amount that should be reported on Lisa's financial statements, assuming the lower-of-cost-or-net-realizable-value rule is applied is:

= $5,151.

Step-by-step explanation:

a) Data and Calculations:

at December 31

Units Cost/Unit NRV/Unit Total Value

Cameras

Minolta 6 $171 $166 $996 ($166 * 6)

Canon 7 149 159 1,043 ($149 * 7)

Light Meters

Vivitar 15 121 118 1,770 ($118 * 15)

Kodak 11 122 135 1,342 ($122 * 11)

Total value of ending inventory $5,151

b) This implies that the value of the ending inventory is based on the lower of each product's cost or net realizable value. Once each individual product's lower cost is chosen, it is then multiplied by the units in ending inventory to obtain the value for the particular product's ending inventory. Then, the sum of the individual values becomes the value of all the ending inventory for Lisa Inc.