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Anuta_ua [19.1K]
3 years ago
12

An art gallery has two vases that have not sold for more than two years. Each vase cost $130 and originally retailed for $250. E

ach vase has a current replacement cost of $90. What will the art gallery report as a loss for the year?
A. $80
B. $180
C. $500
D. $260
Business
1 answer:
Liula [17]3 years ago
6 0

Answer: Option (A)

Explanation:

Under the rules of books as per the US GAAP,  we tend to record all the inventory at the cost or the NRV i.e. Net realizable value whichever is less. Here in this particular case,

Cost for each unit = $130

NRV = $90.

Thus inventory will be recorded at $90 each. This means that we've incurred a loss of $40 each ($130 - $90 = $40).

<em>Accordingly, total loss = $40 \times 2 = $80</em>

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The correct answer is the option A: True.

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Data related to the inventories of Costco Medical Supply are presented below:
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Explanation:

The computation is shown below

<u>Particulars       Surgical         Surgical     Rehab                Rehab    </u>

<u>                         Equipment    Supplies    Equipment        Supplies</u>

Cost (A)              151                    103            256                    153

Selling price       272                  135            342                    153

Less:

cost to sell            18                   10                 18                    7

Net realizable

value (B)                254             125                   324             146

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