A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is 8% and is levied on the buyer
1 answer:
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Answer:
Written down value = $310
Explanation:
The lower of cost or market
The lower of cost or market rule states that a business must record the cost of inventory at whichever cost is lower – the original cost or its current market price. This situation typically arises when inventory has deteriorated, or has become obsolete, or market prices have declined.
The schedule of workings is attached.
<u>Aligator armories </u>
Cost = 15
Market value = $12
Therefore, Market value will be selected, and the cost will be written down by $3.
<u>Bear Bureaus:</u>
Cost = market value, therefore, no change.
<u>Cougar beds</u>
Cost is less than the market value, therefore, no change needed.
<u>Dingo cribs:</u>
Cost = market value, therefore, no change.
<u>Elephant dresser</u>
Cost = 10
Market value = $6
Therefore, Market value will be selected, and the cost will be written down by $4.
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