Question Details

The lower-of-cost-or-net realizable value basis of valuing inventories 


1.	Net realizable value refers to
a.	the net amount the company expects to realize from the sale.
b.	the selling price.
c.	the cost to replace the item.
d.	the gross profit realized from the sale.
	
2.	Which costing method cannot be used to determine the cost of inventory items before lower-of-cost-or-net realizable value market is applied?
a.	Specific identification
b.	FIFO
c.	Average-cost
d.	All of these methods can be used.


3.	Inventory is reported in the financial statements at
a.	cost.
b.	net realizable value.
c.	the higher-of-cost-or-net realizable value.
d.	the lower-of-cost-or-net realizable value.


4.	The lower-of-cost-or-net realizable value basis of valuing inventories is an example of
a.	comparability.
b.	the cost principle.
c.	prudence.
d.	consistency.


5.	Never Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCNRV) basis in valuing inventories:
	Product	   Cost		    NRV	
	A	$114,000	$120,000
	B	80,000	76,000
	C	160,000	162,000
If Never applies the LCNRV basis, the value of the inventory reported on the statement of financial position would be
a.	$354,000.
b.	$358,000.
c.	$350,000.
d.	$362,000.




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