Flint Company uses the LCNRV method, on an individual-item basis, in pricing its
ID: 2544957 • Letter: F
Question
Flint Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $126 $116 $100 $95 $116 $95 Cost 79 84 84 84 53 38 Cost to complete 32 32 26 37 32 32 Selling costs 11 19 11 21 11 21 Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2017, for each of the inventory items above. Item D $ Item E $ Item F $ Item G $ Item H $ Item I $
Explanation / Answer
Answer
First of all we need to find out the Net realizable value( NRV )as under
Item
Estimated selling price
Cost to complete
Selling costs
Net realizable
value
A
B
C
D=A-B-C
126
32
11
83
Iteam E
116
32
19
65
Item F
100
26
11
63
Item G
95
37
21
37
Item H
116
32
11
73
Item I
95
32
21
42
Now we can make table for comparison between Cost and NRV as under
Item
Net realizable
value
Cost
Cost
or NRV
W.E. is lower
Item D
83
79
79
Item E
65
84
65
Item F
63
84
63
Item G
37
84
37
Item H
73
53
53
Item I
42
38
38
unit value for balance sheet reporting purposes at December 31, 2017, is as under
Iteam
Unit value of invenentory
Iteam D
79
Iteam E
65
Iteam F
63
Iteam G
37
Iteam H
53
Iteam I
38
Item
Estimated selling price
Cost to complete
Selling costs
Net realizable
value
A
B
C
D=A-B-C
126
32
11
83
Iteam E
116
32
19
65
Item F
100
26
11
63
Item G
95
37
21
37
Item H
116
32
11
73
Item I
95
32
21
42
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