Brief Exercise 9-4 Presented below is information related to Wildhorse Inc\'s In
ID: 2510038 • Letter: B
Question
Brief Exercise 9-4 Presented below is information related to Wildhorse Inc's Inventory, assuming Wildhorse uses lower-of-LIFO cost-or-market. (per unit) Skis Boots Parkas Historical cost Selling price Cost to distribute Current replacement cost Normal profit margin $281.20 $156.88 $78.44 313.76214.60 109.15 3.70 300.44 155.4075.48 42.9231.45 28.12 11.84 47.36 Determine the following: lower-of-cost-or-market computation for skis. (a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the Celing Limits Floor Limit s (b) The cost amount that should be used in the lower-of cost-or-market comparison of boots. The cost amount s. (c) The market amount that should be used to value parkas on the basis of the lower-of-cost The market amount Click if you would like to Show Work for this question: Open Show WorkExplanation / Answer
Skis Boots Parkas Selling Price $ 313.76 $ 214.60 $ 109.15 Cost to distribute $ 28.12 $ 11.84 $ 3.70 NRV $ 285.64 $ 137.00 $ 71.25 Ceiling=NRV=(Selling Price-Cost to distribute) $ 285.64 $ 202.76 $ 105.45 Normal Profit Margin $ 47.36 $ 42.92 $ 31.45 Floor=NRV-Normal Profit $ 238.28 $ 159.84 $ 74.00 a) The two limits to market value (i.e, the ceiling and floor ) that should be used in the lower -of-cost or market computation for Skis. Ceiling Limit $ 285.64 Floor Limit $ 238.28 b) The cost amount that should be used in the lower of cost -or -market comparison of Boots.(Historical Cost) The cost amount 156.88 c ) The market amount that should be used to value Parkas on the basis of lower -of-cost-or-market Floor Limit $ 74.00 Ceiling Limit $ 105.45 Replacement cost $ 75.48 The market amount =(75.48) (the middle amount of Floor limit,Ceiling limit,Current repalcement cost)=($74,$105.45,$75.48)
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