Question & Answer: SLR Corporation has 2.300 units of each of its two products in its year-end inventory. Per unit data for each of the products are…..

ezto Chapter 9 HW Question 10 (of 17) 10.00 points SLR Corporation has 2.300 units of each of ts two products in its year-end inventory, Per unit data for each of the products are as follows Product 1 Product 2 $ 76 $ 47 Cost Selling price Costs to sel 135 49 Determine the book value of SLRs inventory assuming that the lower of cost and net realizable value rule is applied to individual products. Per Unit Inventory Value Unit Cost of Cost and Product Cost NRV 2,300 2.300 Cost Inventory value What is the before-tax income offect of the adjustment?

SLR Corporation has 2.300 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Determine the hook value of SLR’s inventory assuming that the lower of cost and net realizable value rule is applied to individual products. What is the before-tax income effect of the adjustment?

Expert Answer

 

1) As per lower of cost and NRV(LCM) rule, value of inventory is calculated lower of cost and net realisable value. The value of inventory as per LCM rule is calculated in table shown below:

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(a) (b) (c )Lower of a and b (d) (a*d) (c*d)
Product cost NRV per unit inventory value unit cost lower of cost and NRV
1 $           76 $        126 $             76 $      2,300 $      174,800 $   174,800
($135-$9)
2 $           47 $           45 $             45 $      2,300 $      108,100 $   103,500
($49-$4) cost $      282,900
inventory value $   278,300

2)

Before tax net income = Cost of Inventory -Value of inventory as per LCM
= $282,900-$278,300
=$4,600

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