Kieso, Intermediate Accounting, 16e Help I NMENT Question1 mpany uses the LCNRV

Question

Kieso, Intermediate Accounting, 16e Help I NMENT Question1 mpany uses the LCNRV metho d, on an individual-item basis, in pricing its inventory items. The inventory at December 311 2017, included product ?. Relevant per-unit data for product X areas Estimated selling price Estimated selling costs Normal profit There were 990 units of product ? on hand at December 31, 2017, Product X veas incorrectly valued et S38 par unit forreporting purposes. At 90 an were said inroa Compute the affect of this error on net income for 2017 and the effect on net income for 2018, and indicate the direction of the misstatement for each year Net income for 2017 Net income for 2018 $49 s Obiective SAVE FOR LATER Question Attempts: 0 of 6 used

Explanation / Answer

Cost per unit =$39

NRV =Selling price - estimated selling costs

NRV =$49-$15 =$34

Lower of cost or NRV to be considered for inventory valuation so, $34 per unit to be considered for reporting purposes

Net income for 2017 is overstated by $3,960

Explanation

=990 Units x ($38-$34)

Net income for 2018 is understated by$3,960

Explanation

=990 Units ($34-$38)

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