Ask Question
24 May, 17:50

A local Chevrolet dealership carries the following types of vehicles: Unit Unit Inventory Items Quantity Cost NRV Vans 3 $ 21,000 $ 19,000 Trucks 6 16,800 15,800 2-door sedans 2 11,800 13,800 4-door sedans 7 15,800 18,800 Sports cars 3 31,000 34,000 SUVs 5 27,600 22,000 Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks. 2. Determine whether each inventory item would be reported at cost or net realizable value (NRV). Enter the amount of either the Unit Cost or Unit NRV in the "Lower of Cost and NRV per unit" column and then multiply this amount by the quantity of each inventory item and enter it in the Total column.

+2
Answers (1)
  1. 24 May, 19:15
    0
    Vans, Trucks and SUVs will be reported at NRV while 2-door sedans, 4-door sedans and Sport cars will be reported at cost.

    Inventory Quantity Lower of Cost and NRV per unit Total

    Vans 3 $19,000 $57,000

    Trucks 6 $15,800 $94,800

    2-door sedans 2 $11,800 $23,600

    4-door sedans 7 $15,800 $110,600

    Sports cars 3 $31,000 $93,000

    SUVs 5 $22,000 $110,000

    Explanation:

    IAS 2 Inventories states that inventory is to be recognized at cost, however, subsequent measurement requires that inventory be carried at the lower of cost or net realizable amount (NRV).

    As such, where the cost of inventory is higher than the NRV, it is written down to the NRV using the following entries,

    Debit Inventory write off/Cost of goods sold

    Credit Inventory account

    with the difference between the cost and the NRV.

    Inventory Quantity unit Cost unit NRV

    Vans 3 $21,000 $19,000

    Trucks 6 $16,800 $15,800

    2-door sedans 2 $11,800 $13,800

    4-door sedans 7 $15,800 $18,800

    Sports cars 3 $31,000 $34,000

    SUVs 5 $27,600 $22,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A local Chevrolet dealership carries the following types of vehicles: Unit Unit Inventory Items Quantity Cost NRV Vans 3 $ 21,000 $ 19,000 ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers