Switzer, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date, each computer has a net realizable value of $400. How much loss should Switzer, Inc., record for the year?
A) $1,600.
B) $2,400.
C) $3,200.
D) $4,000.

Question

Quizplus · Accepted Answer

The loss is calculated as the difference between the net realizable value and the cost of the computers. The net realizable value is $400 per computer, and the cost is $600 per computer. Therefore, the loss is $200 per computer, or $1,600 total.