Question

Bramble, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $530 and originally retailed for $950. At the statement date, each computer has a net realizable value of $360. What value should Bramble, Inc., have for the computers at the end of the year?

Answer 1

Answer:

$2,880

Explanation:

US GAAP requires companies to value their inventories at lower of cost or net realizable value.

so we calculate both:

• the cost = 8 x $530 = $4,240
• the net realizable value = 8 x $360 = $2,880

Since the net realizable value is lower, then the computers must be recorded at that price.