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8) Tongas Company applies revaluation accounting to plant assets
with a carrying value of $1,600,000, a useful life of 4 years, and no
salvage value. Depreciation is calculated on the straight-line basis. At
the end of year 1, independent appraisers determine that the asset has
a fair value of $1,500,000.
9) Which of the following is not an acceptable approach in
applying the lower-of-cost-or-market method to inventory?
10) The following data concerning the retail inventory method are
taken from the financial records of Welch Company.
Cost
Retail
Beginning inventory
$ 147,000
$ 210,000
Purchases
672,000
960,000
Freight-in
18,000
—
Net markups
—
60,000
Net markdowns
—
42,000
Sales
—
1,008,000
If the foregoing figures are verified and a count of the ending
inventory reveals that merchandise actually on hand amounts to
$108,000 at retail, the business has
11) Muckenthaler Company sells product 2005WSC for $40 per unit.
The cost of one unit of 2005WSC is $36, and the replacement cost is
$35. The estimated cost to dispose of a unit is $8, and the normal
profit is 40%. At what amount per unit should product 2005WSC be
reported, applying lower-of-cost-or-market?
12) Muckenthaler Company sells product 2005WSC for $40 per unit.
The cost of one unit of 2005WSC is $36, and the replacement cost is
$35. The estimated cost to dispose of a unit is $8, and the normal
profit is 40%. At what amount per unit should product 2005WSC be
reported, applying lower-of-cost-or-market?