Question

Determine which of the following statements are correct regarding damaged or obsolete goods. (Check all that apply.) Damaged goods are included in inventory at their net realizable value. If damaged goods can be sold at a reduced price, they are included in inventory. A loss in value is reported in the period when goods are damaged or become obsolete. Damaged goods are not included in inventory if they cannot be sold. Net realizable value of damaged goods is determined solely by the sales price of the good.

Answer 1

Answer:

Explanation: Damaged goods are goods that do not meet up to the required standards of items to be sold and below are ways damaged goods are treated in the books:

1. Damaged goods are included in inventory at their net realizable value.

2. If damaged goods can be sold at a reduced price, they are included in inventory.

3.Damaged goods are not included in inventory if they cannot be sold

4. A loss in value is reported in the period when goods are damaged or become obsolete.

Answer 2

Answer:

• Damaged goods are included in inventory at their net realizable value
• If damaged goods can be sold at a reduced price, they are included in inventory
• A loss in value is reported in the period when goods are damaged or become obsolete
• Damaged goods are not included in inventory if they cannot be sold

Explanation:

The above statements are correct regarding damaged goods, but the Net realizable value of damaged goods is not determined solely by the sales price of the good it is also determined by the extent of the damage suffered by the good.

when a damaged good is sold whether at  reduced price price or at the cost price it is recorded in the inventory of the firm. once a damaged good is recorded its loss in value is also reported in the period when the goods are damaged or become obsolete this will help with the balancing of the inventories as well