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3 years ago

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Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of sell

ing price, and gross profit is estimated to be 25% of the selling price. Determine the value of inventory applying the lower-of-cost-or-market rule to each individual inventory item.

1 answer:

Ber [7]3 years ago

4 0

Answer:

Item Inventory at the lower-of-cost-or-market

#1 $214.50

#2 $240.00

#3 $266.50

#4 $315.00

#5 $422.50

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question. See attached pdf file for the complete question.

Also note: See the attached excel file for the determination of the value of inventory by applying the lower-of-cost-or-market rule.

From the attached excel file, we have:

Item Inventory at the lower-of-cost-or-market

#1 $214.50

#2 $240.00

#3 $266.50

#4 $315.00

#5 $422.50

<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> xlsx </span>

<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> pdf </span>

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A delivery truck costing $25,000 is expected to have a $1,500 salvage value at the end of its useful life of four years or 125,0

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Answer:

a.

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b.

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c.

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Explanation:

a.

Straight line method is a depreciation method that charges a constant depreciation expense through out the useful life of the asset. Straight line depreciation per year is,

Straight line depreciation = (Cost - Salvage value) / Estimated useful life

Straight line depreciation = (25000 - 1500) / 4 = $5875 per year

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b.

Double declining balance is an accelerated method of depreciation that charges more depreciation in the initial years and less in later years. Double declining balance depreciation is calculated as follows,

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Answer:

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In year 1, present value of cash =X/discount factor

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