Tatum Company has four products in its inventory. Information about the December

Question

Tatum Company has four products in its inventory. Information about the December 31, 2016, inventory is as follows: Total Net 2.5 points Total Realizable Cost Value 101 $136,000 $ 108,000 99,000 118,000 68,000 58,000 38,000 58,000 Product 102 103 104 Print References Required 1. Determine the book value of inventory at December 31, 2016, assuming the lower of cost and net realizable value rule is applied to individual products Inventory Value Product Cost NRV 101 102 103 104 2. Assuming that Tatum reports an inventory write-down as a line item in the income statement, determine the amount of the loss. oss from write-down of inventory

Explanation / Answer

Determine value of inventory under lower of cost and net realizable value :

2) Loss from write down of inventory (341000-303000) = 38000

Product Cost Net realizable value Inventory value 101 136000 108000 108000 102 99000 118000 99000 103 68000 58000 58000 104 38000 58000 38000 Total 341000 303000

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