On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9.
Commodity Inventory Quantity Unit Cost Price Unit Market Price
Buffal 35 $115 $120
Dakota 67 90 75
Frontier 8 300 280
Midwest 83 40 30
Rainbow 100 90 94
EXHIBIT 9 Determining Inventory at Lower of Cost or Market
In Exhibit 9, Items A, B, C, and D could be viewed as a class of inventory items. If the lower-of-cost-or-market method is applied to the class, the inventory would be valued at $15,472, which is a market decline of $48 ($15,520 -$15,472). Likewise, if Items A, B, C, and D make up the total inventory, the lower-of-cost-or-market method as applied to the total inventory would be the same amount, $15,472.
(Warren 233-234)
Warren, Carl S. Survey of Accounting, 6th Edition. Cengage Learning, 02/2012. VitalBook file.