| Author |
|
wool1
Newbie
Joined: 26 May 2011
Online Status: Offline
Posts: 44
|
| Posted: 24 Jun 2012 at 18:21 | IP Logged
|
|
|
Which of the following statements are correct when a company applying LCM reports its inventory at replacement cost?
1) The original cost is less than replacement cost.
2) the NRV is greater than replacement cost.
Book says 2 and 2 only is correct.
|
| Back to Top |
|
| |
wool1
Newbie
Joined: 26 May 2011
Online Status: Offline
Posts: 44
|
| Posted: 25 Jun 2012 at 18:09 | IP Logged
|
|
|
Does anybody agree that neither statewment is correct? The second statement is not necessarily correct because replacement cost can equal NRV.
|
| Back to Top |
|
| |
dandanchaoren
Newbie
Joined: 02 Mar 2012
Location: United States
Online Status: Offline
Posts: 5
|
| Posted: 19 Jul 2012 at 20:34 | IP Logged
|
|
|
choice 2 is correct.
NRV-market ceiling>replacement cost>NRV-profit
margin(market floor)
the mid value above is the "Market" compared with "Cost" in
"LCM". in the question, replacement cost was the "LCM",
agreeing with above and choice 2
|
| Back to Top |
|
| |
dandanchaoren
Newbie
Joined: 02 Mar 2012
Location: United States
Online Status: Offline
Posts: 5
|
| Posted: 19 Jul 2012 at 21:05 | IP Logged
|
|
|
However,
replacement cost is not always the mid value.just want to
clarify. I like to write out the items first, then rank
them
|
| Back to Top |
|
| |
Active Topics 
Memberlist 
Search 
Help
Register 
Login
Topic: easy question, I think book is wrong
Topic Closed)
