{"id":3664,"date":"2020-10-21T21:15:53","date_gmt":"2020-10-21T21:15:53","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=3664"},"modified":"2020-11-17T16:55:34","modified_gmt":"2020-11-17T16:55:34","slug":"lower-of-cost-or-net-realizable-value-applied-2","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/lower-of-cost-or-net-realizable-value-applied-2\/","title":{"raw":"Lower of Cost or Net Realizable Value Applied","rendered":"Lower of Cost or Net Realizable Value Applied"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">Apply the LCNRV rule to merchandise inventory<\/li>\r\n<\/ul>\r\n<\/div>\r\nThe LCNRV rule can be applied to each inventory item, each inventory class, or total inventory, and each may have different results.\r\n\r\nLet\u2019s refer back to Geyer, Co. which holds auto sound systems, speakers, and wiring in inventory. Let\u2019s also assume Geyer uses the FIFO cost flow assumption. The purchasing department has given you the market value for each item according to the rule you provided to them.\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Product ID<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">NRV<\/th>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">A101<\/th>\r\n<td>Wiring harness<\/td>\r\n<td>102.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">CAB 500<\/th>\r\n<td>HQ Speakers<\/td>\r\n<td>50.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">CAB 600<\/th>\r\n<td>HQ Speakers<\/td>\r\n<td>50.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">MMM 333<\/th>\r\n<td>GPS enabled sound system<\/td>\r\n<td>2,625.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Rel 5<\/th>\r\n<td>HQ Speakers<\/td>\r\n<td>50.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">RFS-212<\/th>\r\n<td>GPS enabled sound system<\/td>\r\n<td>400.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">XPS-101<\/th>\r\n<td>GPS enabled sound system<\/td>\r\n<td>80.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nApply LCM to each individual item:\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\"><caption>Inventory List<\/caption>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: left\" colspan=\"8\"><strong>Geyer, Co.<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: right;\" colspan=\"8\"><strong>12\/31\/20XX<\/strong><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n    <td colspan=\"8\">&nbsp;<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Product ID<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Cost<\/th>\r\n<th scope=\"col\">Quantity in Stock<\/th>\r\n<th scope=\"col\">Total Cost (FIFO)<\/th>\r\n<th scope=\"col\">NRV<\/th>\r\n<th scope=\"col\">LCNRV<\/th>\r\n<th scope=\"col\">Total at LCNRV<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>A101<\/td>\r\n<td>Wiring harness<\/td>\r\n<td>99.000<\/td>\r\n<td>30<\/td>\r\n<td>2,970.00<\/td>\r\n<td>102.00<\/td>\r\n<td>99.00<\/td>\r\n<td>2,970.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 500<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>58.000<\/td>\r\n<td>500<\/td>\r\n<td>29,000.00<\/td>\r\n<td>50.00<\/td>\r\n<td>50.00<\/td>\r\n<td>25,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 600<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>99.000<\/td>\r\n<td>15<\/td>\r\n<td>1,485.00<\/td>\r\n<td>50.00<\/td>\r\n<td>50.00<\/td>\r\n<td>750.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>MMM 333<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>1,255.500<\/td>\r\n<td>64<\/td>\r\n<td>80,352.00<\/td>\r\n<td>2,625.00<\/td>\r\n<td>1,255.50<\/td>\r\n<td>80,352.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Rel 5<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>110.000<\/td>\r\n<td>100<\/td>\r\n<td>11,000.00<\/td>\r\n<td>50.00<\/td>\r\n<td>50.00<\/td>\r\n<td>5,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>RFS-212<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>650.000<\/td>\r\n<td>150<\/td>\r\n<td>97,500.00<\/td>\r\n<td>400.00<\/td>\r\n<td>400.00<\/td>\r\n<td>60,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>XPS-101<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>102.375<\/td>\r\n<td>160<\/td>\r\n<td>16,380.00<\/td>\r\n<td>80.00<\/td>\r\n<td>80.00<\/td>\r\n<td>12,800.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\" colspan=\"4\">Total Inventory FIFO<\/th>\r\n<td>$ 238,687.00<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>$ 186,872.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nWe see that market is lower than cost, so the amount we would report on the balance sheet would be $186,872.\r\n\r\nApply LCNRV to the entire inventory:\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\"><caption>Inventory List<\/caption>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: left\" colspan=\"8\"><strong>Geyer, Co.<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: right;\" colspan=\"8\"><strong>12\/31\/20XX<\/strong><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n    <td colspan=\"8\">&nbsp;<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Product ID<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Cost<\/th>\r\n<th scope=\"col\">Quantity in Stock<\/th>\r\n<th scope=\"col\">Total Cost (FIFO)<\/th>\r\n<th scope=\"col\">NRV<\/th>\r\n<td><\/th>\r\n<th scope=\"col\">Total at NRV<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>MMM 333<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>1,255.500<\/td>\r\n<td>64<\/td>\r\n<td>80,352.00<\/td>\r\n<td>2,625.00<\/td>\r\n<td><\/td>\r\n<td>168,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>RFS-212<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>650.000<\/td>\r\n<td>150<\/td>\r\n<td>97,500.00<\/td>\r\n<td>400.00<\/td>\r\n<td><\/td>\r\n<td>60,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>XPS-101<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>102.375<\/td>\r\n<td>160<\/td>\r\n<td>16,380.00<\/td>\r\n<td>80.00<\/td>\r\n<td><\/td>\r\n<td>12,800.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 500<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>58.000<\/td>\r\n<td>500<\/td>\r\n<td>29,000.00<\/td>\r\n<td>50.00<\/td>\r\n<td><\/td>\r\n<td>25,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 600<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>99.000<\/td>\r\n<td>15<\/td>\r\n<td>1,485.00<\/td>\r\n<td>50.00<\/td>\r\n<td><\/td>\r\n<td>750.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Rel 5<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>110.000<\/td>\r\n<td>100<\/td>\r\n<td>11,000.00<\/td>\r\n<td>50.00<\/td>\r\n<td><\/td>\r\n<td>5,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>A101<\/td>\r\n<td>Wiring harness<\/td>\r\n<td>99.000<\/td>\r\n<td>30<\/td>\r\n<td>2,970.00<\/td>\r\n<td>102.00<\/td>\r\n<td><\/td>\r\n<td>3,060.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\" colspan=\"4\">Total Inventory FIFO<\/th>\r\n<td>$ 238,687.00<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>$ 274,610.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nWe see that, overall, the market value is higher than cost if we just aggregate everything before we compare cost and market.\r\n\r\nFinally, let\u2019s look at the same data using three classes of inventory:\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\"><caption>Inventory List<\/caption>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: left\" colspan=\"8\"><strong>Geyer, Co.<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: right;\" colspan=\"8\"><strong>12\/31\/20XX<\/strong><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n    <td colspan=\"8\">&nbsp;<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Product ID<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Cost<\/th>\r\n<th scope=\"col\">Quantity in Stock<\/th>\r\n<th scope=\"col\">Total Cost (FIFO)<\/th>\r\n<th scope=\"col\">NRV<\/th>\r\n<td><\/td>\r\n<th scope=\"col\">Total at NRV<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>MMM 333<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>1,255.500<\/td>\r\n<td>64<\/td>\r\n<td>80,352.00<\/td>\r\n<td>2,625.00<\/td>\r\n<td><\/td>\r\n<td>168,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>RFS-212<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>650.000<\/td>\r\n<td>150<\/td>\r\n<td>97,500.00<\/td>\r\n<td>400.00<\/td>\r\n<td><\/td>\r\n<td>60,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>XPS-101<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>102.375<\/td>\r\n<td>160<\/td>\r\n<td>16,380.00<\/td>\r\n<td>80.00<\/td>\r\n<td><\/td>\r\n<td>12,800.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"highlight\">LCM Sound<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\">194,232.00<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\">240,800.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 500<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>58.000<\/td>\r\n<td>500<\/td>\r\n<td>29,000.00<\/td>\r\n<td>50.00<\/td>\r\n<td><\/td>\r\n<td>25,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 600<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>99.000<\/td>\r\n<td>15<\/td>\r\n<td>1,485.00<\/td>\r\n<td>50.00<\/td>\r\n<td><\/td>\r\n<td>750.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Rel 5<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>110.000<\/td>\r\n<td>100<\/td>\r\n<td>11,000.00<\/td>\r\n<td>50.00<\/td>\r\n<td><\/td>\r\n<td>5,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"highlight\">LCM Speakers<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\">41,485.00<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\">30,750.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"highlight\">A101<\/td>\r\n<td class=\"highlight\">Wiring harness<\/td>\r\n<td class=\"highlight\">99.000<\/td>\r\n<td class=\"highlight\">30<\/td>\r\n<td class=\"highlight\">2,970.00<\/td>\r\n<td class=\"highlight\">102.00<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"highlight\">3,060.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\" colspan=\"4\">Total Inventory FIFO<\/th>\r\n<td>$ 238,687.00<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>$ 274,610.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th colspan=\"7\" class=\"r\" scope=\"col\">LCM by class<\/th>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"7\" class=\"r\">Sound<\/td>\r\n<td class=\"r\">194,232.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"7\" class=\"r\">Speakers<\/td>\r\n<td class=\"r\">30,750.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"7\" class=\"r\">Wiring<\/td>\r\n<td class=\"r\"> 2,970.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"7\"><\/td>\r\n<td class=\"r\">227,952.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nThe LCNRV for sound systems was cost. The LCNRV for speakers was market, and the LCNRV for wiring was cost. In total, using the class system, we would adjust inventory down to $227,952.\r\n\r\nIn the next section, we\u2019ll look at four different ways to make an LCNRV adjustment to inventory.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23769\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li style=\"font-weight: 400;\">Apply the LCNRV rule to merchandise inventory<\/li>\n<\/ul>\n<\/div>\n<p>The LCNRV rule can be applied to each inventory item, each inventory class, or total inventory, and each may have different results.<\/p>\n<p>Let\u2019s refer back to Geyer, Co. which holds auto sound systems, speakers, and wiring in inventory. Let\u2019s also assume Geyer uses the FIFO cost flow assumption. The purchasing department has given you the market value for each item according to the rule you provided to them.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<tbody>\n<tr>\n<th scope=\"col\">Product ID<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">NRV<\/th>\n<\/tr>\n<tr>\n<th scope=\"row\">A101<\/th>\n<td>Wiring harness<\/td>\n<td>102.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">CAB 500<\/th>\n<td>HQ Speakers<\/td>\n<td>50.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">CAB 600<\/th>\n<td>HQ Speakers<\/td>\n<td>50.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">MMM 333<\/th>\n<td>GPS enabled sound system<\/td>\n<td>2,625.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Rel 5<\/th>\n<td>HQ Speakers<\/td>\n<td>50.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">RFS-212<\/th>\n<td>GPS enabled sound system<\/td>\n<td>400.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">XPS-101<\/th>\n<td>GPS enabled sound system<\/td>\n<td>80.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Apply LCM to each individual item:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<caption>Inventory List<\/caption>\n<tbody>\n<tr>\n<td style=\"text-align: left\" colspan=\"8\"><strong>Geyer, Co.<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: right;\" colspan=\"8\"><strong>12\/31\/20XX<\/strong><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\">&nbsp;<\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Product ID<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Cost<\/th>\n<th scope=\"col\">Quantity in Stock<\/th>\n<th scope=\"col\">Total Cost (FIFO)<\/th>\n<th scope=\"col\">NRV<\/th>\n<th scope=\"col\">LCNRV<\/th>\n<th scope=\"col\">Total at LCNRV<\/th>\n<\/tr>\n<tr>\n<td>A101<\/td>\n<td>Wiring harness<\/td>\n<td>99.000<\/td>\n<td>30<\/td>\n<td>2,970.00<\/td>\n<td>102.00<\/td>\n<td>99.00<\/td>\n<td>2,970.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 500<\/td>\n<td>HQ Speakers<\/td>\n<td>58.000<\/td>\n<td>500<\/td>\n<td>29,000.00<\/td>\n<td>50.00<\/td>\n<td>50.00<\/td>\n<td>25,000.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 600<\/td>\n<td>HQ Speakers<\/td>\n<td>99.000<\/td>\n<td>15<\/td>\n<td>1,485.00<\/td>\n<td>50.00<\/td>\n<td>50.00<\/td>\n<td>750.00<\/td>\n<\/tr>\n<tr>\n<td>MMM 333<\/td>\n<td>GPS enabled sound system<\/td>\n<td>1,255.500<\/td>\n<td>64<\/td>\n<td>80,352.00<\/td>\n<td>2,625.00<\/td>\n<td>1,255.50<\/td>\n<td>80,352.00<\/td>\n<\/tr>\n<tr>\n<td>Rel 5<\/td>\n<td>HQ Speakers<\/td>\n<td>110.000<\/td>\n<td>100<\/td>\n<td>11,000.00<\/td>\n<td>50.00<\/td>\n<td>50.00<\/td>\n<td>5,000.00<\/td>\n<\/tr>\n<tr>\n<td>RFS-212<\/td>\n<td>GPS enabled sound system<\/td>\n<td>650.000<\/td>\n<td>150<\/td>\n<td>97,500.00<\/td>\n<td>400.00<\/td>\n<td>400.00<\/td>\n<td>60,000.00<\/td>\n<\/tr>\n<tr>\n<td>XPS-101<\/td>\n<td>GPS enabled sound system<\/td>\n<td>102.375<\/td>\n<td>160<\/td>\n<td>16,380.00<\/td>\n<td>80.00<\/td>\n<td>80.00<\/td>\n<td>12,800.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\" colspan=\"4\">Total Inventory FIFO<\/th>\n<td>$ 238,687.00<\/td>\n<td><\/td>\n<td><\/td>\n<td>$ 186,872.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>We see that market is lower than cost, so the amount we would report on the balance sheet would be $186,872.<\/p>\n<p>Apply LCNRV to the entire inventory:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<caption>Inventory List<\/caption>\n<tbody>\n<tr>\n<td style=\"text-align: left\" colspan=\"8\"><strong>Geyer, Co.<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: right;\" colspan=\"8\"><strong>12\/31\/20XX<\/strong><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\">&nbsp;<\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Product ID<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Cost<\/th>\n<th scope=\"col\">Quantity in Stock<\/th>\n<th scope=\"col\">Total Cost (FIFO)<\/th>\n<th scope=\"col\">NRV<\/th>\n<td>\n<\/td>\n<th scope=\"col\">Total at NRV<\/th>\n<\/tr>\n<tr>\n<td>MMM 333<\/td>\n<td>GPS enabled sound system<\/td>\n<td>1,255.500<\/td>\n<td>64<\/td>\n<td>80,352.00<\/td>\n<td>2,625.00<\/td>\n<td><\/td>\n<td>168,000.00<\/td>\n<\/tr>\n<tr>\n<td>RFS-212<\/td>\n<td>GPS enabled sound system<\/td>\n<td>650.000<\/td>\n<td>150<\/td>\n<td>97,500.00<\/td>\n<td>400.00<\/td>\n<td><\/td>\n<td>60,000.00<\/td>\n<\/tr>\n<tr>\n<td>XPS-101<\/td>\n<td>GPS enabled sound system<\/td>\n<td>102.375<\/td>\n<td>160<\/td>\n<td>16,380.00<\/td>\n<td>80.00<\/td>\n<td><\/td>\n<td>12,800.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 500<\/td>\n<td>HQ Speakers<\/td>\n<td>58.000<\/td>\n<td>500<\/td>\n<td>29,000.00<\/td>\n<td>50.00<\/td>\n<td><\/td>\n<td>25,000.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 600<\/td>\n<td>HQ Speakers<\/td>\n<td>99.000<\/td>\n<td>15<\/td>\n<td>1,485.00<\/td>\n<td>50.00<\/td>\n<td><\/td>\n<td>750.00<\/td>\n<\/tr>\n<tr>\n<td>Rel 5<\/td>\n<td>HQ Speakers<\/td>\n<td>110.000<\/td>\n<td>100<\/td>\n<td>11,000.00<\/td>\n<td>50.00<\/td>\n<td><\/td>\n<td>5,000.00<\/td>\n<\/tr>\n<tr>\n<td>A101<\/td>\n<td>Wiring harness<\/td>\n<td>99.000<\/td>\n<td>30<\/td>\n<td>2,970.00<\/td>\n<td>102.00<\/td>\n<td><\/td>\n<td>3,060.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\" colspan=\"4\">Total Inventory FIFO<\/th>\n<td>$ 238,687.00<\/td>\n<td><\/td>\n<td><\/td>\n<td>$ 274,610.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>We see that, overall, the market value is higher than cost if we just aggregate everything before we compare cost and market.<\/p>\n<p>Finally, let\u2019s look at the same data using three classes of inventory:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<caption>Inventory List<\/caption>\n<tbody>\n<tr>\n<td style=\"text-align: left\" colspan=\"8\"><strong>Geyer, Co.<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: right;\" colspan=\"8\"><strong>12\/31\/20XX<\/strong><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\">&nbsp;<\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Product ID<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Cost<\/th>\n<th scope=\"col\">Quantity in Stock<\/th>\n<th scope=\"col\">Total Cost (FIFO)<\/th>\n<th scope=\"col\">NRV<\/th>\n<td><\/td>\n<th scope=\"col\">Total at NRV<\/th>\n<\/tr>\n<tr>\n<td>MMM 333<\/td>\n<td>GPS enabled sound system<\/td>\n<td>1,255.500<\/td>\n<td>64<\/td>\n<td>80,352.00<\/td>\n<td>2,625.00<\/td>\n<td><\/td>\n<td>168,000.00<\/td>\n<\/tr>\n<tr>\n<td>RFS-212<\/td>\n<td>GPS enabled sound system<\/td>\n<td>650.000<\/td>\n<td>150<\/td>\n<td>97,500.00<\/td>\n<td>400.00<\/td>\n<td><\/td>\n<td>60,000.00<\/td>\n<\/tr>\n<tr>\n<td>XPS-101<\/td>\n<td>GPS enabled sound system<\/td>\n<td>102.375<\/td>\n<td>160<\/td>\n<td>16,380.00<\/td>\n<td>80.00<\/td>\n<td><\/td>\n<td>12,800.00<\/td>\n<\/tr>\n<tr>\n<td class=\"highlight\">LCM Sound<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\">194,232.00<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\">240,800.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 500<\/td>\n<td>HQ Speakers<\/td>\n<td>58.000<\/td>\n<td>500<\/td>\n<td>29,000.00<\/td>\n<td>50.00<\/td>\n<td><\/td>\n<td>25,000.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 600<\/td>\n<td>HQ Speakers<\/td>\n<td>99.000<\/td>\n<td>15<\/td>\n<td>1,485.00<\/td>\n<td>50.00<\/td>\n<td><\/td>\n<td>750.00<\/td>\n<\/tr>\n<tr>\n<td>Rel 5<\/td>\n<td>HQ Speakers<\/td>\n<td>110.000<\/td>\n<td>100<\/td>\n<td>11,000.00<\/td>\n<td>50.00<\/td>\n<td><\/td>\n<td>5,000.00<\/td>\n<\/tr>\n<tr>\n<td class=\"highlight\">LCM Speakers<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\">41,485.00<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\">30,750.00<\/td>\n<\/tr>\n<tr>\n<td class=\"highlight\">A101<\/td>\n<td class=\"highlight\">Wiring harness<\/td>\n<td class=\"highlight\">99.000<\/td>\n<td class=\"highlight\">30<\/td>\n<td class=\"highlight\">2,970.00<\/td>\n<td class=\"highlight\">102.00<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"highlight\">3,060.00<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\" colspan=\"4\">Total Inventory FIFO<\/th>\n<td>$ 238,687.00<\/td>\n<td><\/td>\n<td><\/td>\n<td>$ 274,610.00<\/td>\n<\/tr>\n<tr>\n<th colspan=\"7\" class=\"r\" scope=\"col\">LCM by class<\/th>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"7\" class=\"r\">Sound<\/td>\n<td class=\"r\">194,232.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"7\" class=\"r\">Speakers<\/td>\n<td class=\"r\">30,750.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"7\" class=\"r\">Wiring<\/td>\n<td class=\"r\"> 2,970.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"7\"><\/td>\n<td class=\"r\">227,952.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>The LCNRV for sound systems was cost. The LCNRV for speakers was market, and the LCNRV for wiring was cost. In total, using the class system, we would adjust inventory down to $227,952.<\/p>\n<p>In the next section, we\u2019ll look at four different ways to make an LCNRV adjustment to inventory.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23769\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23769&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23769\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-3664\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Lower of Cost or Net Realizable Value Applied. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":17,"menu_order":14,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Lower of Cost or Net Realizable Value Applied\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"bada3aa0-a77b-45db-b4cb-851c7d0a67d4, 2a1d5a35-5ee0-43da-9545-0ad13fedfb57","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-3664","chapter","type-chapter","status-publish","hentry"],"part":102,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3664","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":12,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3664\/revisions"}],"predecessor-version":[{"id":6034,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3664\/revisions\/6034"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/102"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3664\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/media?parent=3664"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=3664"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/contributor?post=3664"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/license?post=3664"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}