Question 1BE - Intermediate Accounting (Kieso)

Question

Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical cost \(190.00 \)106.00 $53.00 Selling price 212.00 145.00 73.75 Cost to sell 19.00 8.00 2.50 Cost to complete 32.00 29.00 21.25 Determine the following: (a) the net realizable value for each item, and (b) the carrying value of each item under LCN

Step-by-Step Solution

Answer

(a) Net realizable value per unit for Skis, Boots, and Parkas equals $161, $108, and $50, respectively.

(b) Carrying value per unit for Skis, Boots, and Parkas equals $161, $106, and $50, respectively.

Calculate net realizable value for each item

(a) Net realizable value for each item is calculated as follows: 

	Skis	Boots	Parkas
Selling price	$212	$145	$73.75
Less: Cost to sell	19	8	2.50
Less: Cost to complete	32	29	21.25
Net Realizable Value	$161	$108	$50

 

Calculate carrying value of each item using LCNRV

(b) Carrying value of each item using LCNRV is calculated as follows:

 

	Skis	Boots	Parkas
Historical Cost	$190	$106	$53
Net Realizable Value	161	108	50
Carrying Value as per LCNRV	$161	$106	$50