Taipai Company follows the practice of valuing its inventory at the LCNRV. The following information is available from the company’s inventory records as of December 31, 2010. Item Quantity Unit Cost$ Estimated Selling Completion&Selling Price per Unit $ Cost per Unit $ A 1,100 7.50 10.50 1.50 B 800 8.20 9.40 1.30 C 1,000 5.60 7.20 1.75 D 1,000 3.80 6.

Taipai Company follows the practice of valuing its inventory at the LCNRV. The following information is available from the company’s inventory records as of December 31, 2010. Item Quantity Unit Cost$ Estimated Selling Completion&Selling Price per Unit $ Cost per Unit $ A 1,100 7.50 10.50 1.50 B 800 8.20 9.40 1.30 C 1,000 5.60 7.20 1.75 D 1,000 3.80 6.30 1.80 E 1,400 6.40 6.70 0.70 Jay is an accounting clerk in the accounting department of Taipai Company, and he cannot understand how completion and selling costs affect the determination of net realisable value. Jay is very confused and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant. (a) Calculate the LCNRV using the “individual item” approach. (b) Show the journal entry he will need to make in order to write down the ending inventory from cost to market. (0) Then, write in a memo format, explaining to Jay what net realisable value is as well as how it is computed. Use your calculations from above as part of your explanation.

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The post Taipai Company follows the practice of valuing its inventory at the LCNRV. The following information is available from the company’s inventory records as of December 31, 2010. Item Quantity Unit Cost$ Estimated Selling Completion&Selling Price per Unit $ Cost per Unit $ A 1,100 7.50 10.50 1.50 B 800 8.20 9.40 1.30 C 1,000 5.60 7.20 1.75 D 1,000 3.80 6. appeared first on Superb Professors.