Carla Vista Inc. has the following information related to an item in its ending inventory. Product 66 has a cost of $152, a replacement cost of $143, a net realizable value of $148, and a normal profit margin of $12. What is the final lower-of-cost-or-market inventory value for product 66? $143. $148. $140. $152.

Question

Mackenzie Vaughan

Business

26 August, 08:25

Carla Vista Inc. has the following information related to an item in its ending inventory. Product 66 has a cost of $152, a replacement cost of $143, a net realizable value of $148, and a normal profit margin of $12. What is the final lower-of-cost-or-market inventory value for product 66? $143. $148. $140. $152.

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Answers (1)

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Muhammad Norton · Answer 1

The correct option is $143

Explanation:

The lower-of-cost-or-market inventory value analysis requires that inventory be valued at lower initial cost price and marketing facing prices.

The market-inclined prices are replacement cost of $143 and net realizable value of $148, obviously, the lower of the market prices is replacement cost of $143.

Finally, the net realizable when compared to initial cost of $152, the replacement cost ended up being the lower, hence the inventory of product 66 should be valued at replacement cost of $143