Question

Konan, Inc. needs to determine its inventory value. The following information pertains to the individual products in ending inventory: Product Cost Replacement Cost Selling Price Cost of Completion Normal Profit L-19 $40 $38 $50 $2 $11 M-23 52 40 60 10 8 N-05 20 24 30 2 6 Assuming Konan uses the FIFO method for costing its inventory, writedown of inventory value for item M-23 is:

Answer 1

Answer:

$2

Explanation:

The computation is shown below:

As we know that

Net realizable value = Selling price − Cost of completion

= $ 60 - $10

= $50

And, the cost of the item M-23 is $52

So, the write down of inventory value of the item M-23 is

= Cost of the item - net realizable value

= $52 - $50

= $2

We simply deduct the cost from the net realizable value so that the write down value could come