The Calvin-Dogwood Partnership owns inventory that was purchased for $90,000, has a current replacement cost of $85,900, and is priced to sell for $125,000. At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted?

Question

Quizplus · Accepted Answer

Inventory should be recorded at the lower of cost or market (LCM) value. In this case, the cost is $90,000 and the market value (current replacement cost) is $85,900. Therefore, the inventory should be recorded at $85,900.

The Calvin-Dogwood Partnership Owns Inventory That Was Purchased for $90,000