Help! Please compute this inventory below using the LIFO method for measuring in
ID: 2577882 • Letter: H
Question
Help! Please compute this inventory below using the LIFO method for measuring inventory to PART 1, 2 and 3. Compute the Inventory value(Due at the end of unit 2) Best Value Hardware had the following inventory on hand at 12/31/16. BVH uses the LIFO method for measuring inventory.
# Units | LIFO $Cost | FIFO $Cost | NRV 177,000$115,050 $125,050$150,450 250,000 $250,000 $275,000 $325,000 150,000$375,000 $395,000$337,500 175,000 $603,750 $633,750 $568,750 200,000$ Item Light bulbs Paint brushes Live plants Holiday items Hammers $550,000 $575,000 $600,000 00 $2,003,800 $1981700 Requirements in the provided Excel Template on the Inventory Worksheet Tab 1. 2. 3. Compute the value of the inventory using LIFO and GAAP Create the required journal entries regarding the value of the inventory Compute the value of the inventory using FIFO and IFRS. Discuss why the valuation and journal entries are different if computed under IFRS. 4.Explanation / Answer
1. Valuation under LIFO as per US GAAP.
Under US GAAP, inventory is valued at lower of the cost or market value. Market value is the net realizable value less any cost of sale associated.
LIFO
Item
Units
LC
NRV
LC-NRV
Adjustment
Entry
Light Bulbs
177,000
115,050
150,450
(35,400)
0
Paint Brushes
250,000
250,000
325,000
(75,000)
0
Live Plants
150,000
375,000
337,500
37,500
37,500
Loss on inventory write down
TO Allowance on inventory
Holiday Items
175,000
603,750
568,750
35,000
35,000
Loss on inventory write down
TO Allowance on inventory
Hammers
200,000
550,000
600,000
(50,000)
0
2. Journal entry
Date
Particulars
Dr. Amount
Cr. Amount
31/12/2016
Loss on inventory write down
TO Allowance on inventory to LCM
37,500
37,500
31/12/2016
Loss on inventory write down
TO Allowance on inventory to LCM
35,000
35,000
Item
Units
LC
NRV
LC-NRV
Adjustment
Entry
Light Bulbs
177,000
115,050
150,450
(35,400)
0
Paint Brushes
250,000
250,000
325,000
(75,000)
0
Live Plants
150,000
375,000
337,500
37,500
37,500
Loss on inventory write down
TO Allowance on inventory
Holiday Items
175,000
603,750
568,750
35,000
35,000
Loss on inventory write down
TO Allowance on inventory
Hammers
200,000
550,000
600,000
(50,000)
0
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