Lower of cost and net realizable value
Response to the following problem:
SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:
Product 1 Product 2
Cost $50 $34
Selling price 70 36
Costs to sell 6 4
Determine the book value of SLR's inventory assuming that the lower of cost and net realizable value rule is applied to individual products. What is the before-tax income effect of the adjustment?