Business, 11.02.2020 23:29, asseatingbandit

At the end of the year, Ian Co. determined its inventory to be $258,000 on a FIFO (first in, first out) basis. The current replacement cost of this inventory was $230,000. Ian estimates that it could sell the inventory for $275,000 at a disposal cost of $14,000. If Ian's normal profit margin for its inventory was $10,000, what would be its net carrying value?
To apply the lower-of-cost-or-market rule, the cost and market values must first be calculated. The cost of Ian Co.’s inventory is given as $258,000. The market value is replacement cost, subject to a ceiling of net realizable value (NRV, calculated as sales price – disposal cost) and a floor of NRV – minus the normal profit margin. Here, the replacement cost of $230,000 is lower than the floor of $251,000 (NRV of $261,000 - $10,000), which means the floor is considered the market value. Since $251,000 (market) is lower than $258,000 (cost), $251,000 is the net carrying value of Ian Co.’s inventory. True or False

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At the end of the year, Ian Co. determined its inventory to be $258,000 on a FIFO (first in, first o...