Question

Novak Corp. developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: Product Cost Market

A $139000 $146000
B 98000 93000
C 195000 198000
If Novak applies the LCM basis, the value of the inventory reported on the balance sheet would be:________
a. $442000
b. $432000
c. $437000
d. $427000

Answer 1

Answer: $427,000

Step-by-step explanation:

Based on the Generally Accepted Accounting principles, to solve this question, the inventory have to be recorded based on the lower cost or net realizable value. This will therefore be:

A = $139,000

B = $93,000

C = $195,000

The value of the inventory reported on the balance sheet would be:

= $139,000 + $93,000 + $195,000

= $427,000