On April 1, Robert LLC purchased two units of inventory, A and B. The cost of unit A was $665, and the cost of unit B was $580. On April 30, Robert LLC had not sold the inventory. The market value of unit A was now $680 while the market value of unit B was $495. The adjustment associated with the lower-of-cost-or-market method on April 30 will be:

Question

Business

China

16 October, 23:28

On April 1, Robert LLC purchased two units of inventory, A and B. The cost of unit A was $665, and the cost of unit B was $580. On April 30, Robert LLC had not sold the inventory. The market value of unit A was now $680 while the market value of unit B was $495. The adjustment associated with the lower-of-cost-or-market method on April 30 will be:

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Gianna Joseph · Answer 1

Unit A - $665

Unit B - $495

Explanation:

According to the accounting principles, the inventory is valued at cost or market value whichever is lower.

So, in the given case

The inventory cost of unit A should be recorded at $665 cost value because it is a lower value than the market value i. e. $680

And, The inventory cost of unit B should be recorded at $495 market value because it is a lower value than the historical cost i. e. $580