Question

A company has the following per unit recorded cost and replacement cost relating to its inventory:Item 1 5 units Cost $50 Market $45Item 2 7 units Cost $60 Market $65Item 3 9 units Cost $30 Market $25Applying the lower of cost or market method, the reported value of this company's ending inventory if LCM is applied to individual items is _____.

Answer 1

The reported value of this company's ending inventory if LCM is applied to individual items is $870.

What is reported value?

The value of any assets or liabilities or any such credentials, which is recorded in the books of official record for the purpose of accounting as per the standards, is known as the reported value.

The computation of the reported value in the given condition will be,

1. Item 1 – 5 Units x $45= $225;
2. Item 2 – 7 units x $60= $420;
3. Item 3 – 9 Units x $25= $225.

The summation of all the reported values will be,

$(225+420+225)= $870.

Hence, the reported value of the inventory of the company is as aforementioned.

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