Question

Given the acquisition cost of product z is $30, the net realizable value for product z is $27, the normal profit for product z is $1, and the market value (replacement cost) for product z is $24, what is the proper per unit inventory value for product z applying lcm?

Answer 1

lcm requires to value inventory at the lower of acquisition cost or net realizable value.

Net realizable value = $27 - $1 = $26
Cost = $30

Therefore, it would be valued at $26