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Drupady [299]
3 years ago
9

Feather Company's inventory is recorded at its historical cost of $100,000. The replacement cost currently is $95,000; estimated

selling price $102,000; estimated selling cost is $5,000; normal profit is $10,000. The estimated net realizable value of the inventory is:________.
a- $100,000
b- $97,000
c- $87,000
d- $102,000
Business
2 answers:
Alisiya [41]3 years ago
6 0

Answer:

Option B. $97,000

Explanation:

The International Accounting Standard IAS 2 Inventories says that the asset must recorded at lower of:

  • Fair Market Value less cost to sell (Net realizable Value)
  • Historic Cost

Here

Cost is $100,000

Fair value less cost to sell = $102,000 - $5,000 = $97,000

Here the lower value is $97,000 so the right answer is option B.

Liula [17]3 years ago
5 0

Answer:

B. $97000

Explanation:

Given that

Estimated selling price = 102000

Estimated selling cost = 5000

Recall that

The net realizable value which is NRV

= Estimated selling price - estimated selling cost

Thus,

NRV = 102,000 - 5000

= 97000

Therefore, the estimated net realizable value is $97000.

Note, the other parameters listed are not used in estimating NRV.

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Answer: BruceCo would have to sell 220 backpacks

Explanation: The projection of a $10,000 profit can be calculated properly by the equation;

Revenue - Cost = Profit

There is a one-time set up charge of 1000 and this is a fixed cost (as it does not change regardless of how many units they eventually sell). Also they would be spending $30 to buy each unit and still spend $20 to customize each. So each unit would cost $50 to acquire. If they plan on selling each unit at the rate of $100, then the total revenue would be 100 times X (where X is the number of units sold). Therefore the profit can be better projected by the equation;

Revenue - Cost = Profit

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4 0
3 years ago
a corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. its common-size percent for cash equal
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B. 7.85% is the is its common-size percent for cash (14000÷178300)×100

Line items are shown as a percentage of a single chosen or common figure in a financial statement of common size. A balance sheet will contain different line items depending on the type of firm and the industry. Since all businesses in a given industry deal with the same kinds of transactions, the line items utilised for their balance sheets will typically be comparable.

It is simpler to study a company over time and evaluate it against its competitors when financial statements are created in a common size. One can identify trends that a raw financial statement might not reveal by using financial statements of a common size.

Learn more about common size percent here:

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