Whicher Corporation had three products in its ending inventory at December 31, 2
ID: 2376171 • Letter: W
Question
Whicher Corporation had three products in its ending inventory at December 31, 2009. Whicher Corporation considers a profit margin of 15% of the sales price average for product 1 and a profit margin of 10% of the sales price average for products 2 and 3. When Whicher Corporation sells its products, it expects to incur selling costs equal to 5% of the selling price. The chart below gives further information about each product:Product, Cost, Replacement Cost, Selling Price
Product 1 $150 $160 $180
Product 2 $180 $155 $160
Product 3 $120 $100 $120
Required
a. What is the amount of write-down (if any) required using US GAAP? Calculate the write-down on both an individual and a total inventory basis.
b. What is the amount of write-down (if any) required using IFRS? Calculate the write-down on both an individual and a total inventory basis.
Explanation / Answer
cost
Replacemnet cost
Lcm
Product one
150
160
ignore
Product two
180
155
25
Clsoing inventory x 25
Product three
120
100
20
Closing inventory x 20
Product one-ignored----as COST PRICE LOWER THAN REPALCEMENT
TOTAL CLOSING INVENTORY= CLOSING INVENTORY X 45
=================
cost
Replacemnet cost
Lcm
Product one
150
160
ignore
Product three
120
100
20
cost
Replacemnet cost
Lcm
Product one
150
160
ignore
Product two
180
155
25
Clsoing inventory x 25
Product three
120
100
20
Closing inventory x 20
Product one-ignored----as COST PRICE LOWER THAN REPALCEMENT
TOTAL CLOSING INVENTORY= CLOSING INVENTORY X 45
=================
cost
Replacemnet cost
Lcm
Product one
150
160
ignore
Product three
120
100
20
cost
Replacemnet cost
Lcm
Product one
150
160
ignore
Product two
180
155
25
Clsoing inventory x 25
Product three
120
100
20
Closing inventory x 20
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