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  • Problem 12 3 Sheet1 2

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    Astrid Aboitiz
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    This document shows the cost, net realizable value (NRV), and lower of cost or NRV (LCNRV) of different ski equipment inventory items totaling $5 million at cost. It then presents the ending inventory value under the direct and allowance methods, being $4.8 million and $5 million respectively, resulting in a $200,000 inventory writedown under the direct method that is accounted for through an inventory allowance account.

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    This document shows the cost, net realizable value (NRV), and lower of cost or NRV (LCNRV) of different ski equipment inventory items totaling $5 million at cost. It then presents the ending inventory value under the direct and allowance methods, being $4.8 million and $5 million respectively, resulting in a $200,000 inventory writedown under the direct method that is accounted for through an inventory allowance account.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    11 views1 page

    Problem 12 3 Sheet1 2

    Uploaded by

    Astrid Aboitiz
    This document shows the cost, net realizable value (NRV), and lower of cost or NRV (LCNRV) of different ski equipment inventory items totaling $5 million at cost. It then presents the ending inventory value under the direct and allowance methods, being $4.8 million and $5 million respectively, resulting in a $200,000 inventory writedown under the direct method that is accounted for through an inventory allowance account.

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    © All Rights Reserved
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    of 1

    Cost NRV LCNRV

    Skis 2,200,000 2,500,000 2,200,000


    Boots 1,700,000 1,500,000 1,500,000
    Ski Equipment 700,000 800,000 700,000
    Ski Apparel 400,000 500,000 400,000
    Total 5,000,000 5,300,000 4,800,000

    DIRECT METHOD
    Ending Inventory 4,800,000
    Income Summary 4,800,000

    ALLOWANCE METHOD
    Ending Inventory 5,000,000
    Income Summary 5,000,000

    Loss on Inventory Writedown 200,000


    Allowance for inventory writedown 200,000

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