Data related to the inventories of Mountain Ski Equipment and Supplies is presented below:
- In applying the lower of cost or market rule, the inventory of apparel would be valued at:
A) $108,000.
B) $ 90,000.
C) $110,000.
D) $115,000.

Question

Data related to the inventories of Mountain Ski Equipment and Supplies is presented below: 
- In applying the lower of cost or market rule, the inventory of apparel would be valued at:
A) $108,000. 
B) $ 90,000. 
C) $110,000. 
D) $115,000.

Quizplus · Accepted Answer

RC = $110,000.
NRV = $120,000 - ($120,000 × 10%) = $108,000.
NRV - Normal profit margin = $108,000 - ($120,000 × 15%) = $90,000.
Designated market = NRV = $108,000.
Cost = $90,000.
Cost is lower than market.

Data Related to the Inventories of Mountain Ski Equipment and Supplies