Question

Carla Vista Inc. has the following information related to an item in its ending inventory. Product 66 has a cost of $152, a replacement cost of $143, a net realizable value of $148, and a normal profit margin of $12. What is the final lower-of-cost-or-market inventory value for product 66? $143. $148. $140. $152.

Answer 1

The correct option is $143

Step-by-step explanation:

The lower-of-cost-or-market inventory value analysis requires that inventory be valued at lower initial cost price and marketing facing prices.

The market-inclined prices are replacement cost of $143 and net realizable value of $148,obviously,the lower of the market prices is replacement cost of $143.

Finally,the net realizable when compared to initial cost of $152,the replacement cost ended up being the lower,hence the inventory of product 66 should be valued at replacement cost of $143