Determine the value of the company”s inventory under the lower-of-cost-or-market approach.
(a) Tracy Company sells three different types of home heating stoves (gas, wood, and pellet). The cost and market value of its inventory of stoves are as follows.
Cost
Market
Gas
$ 84,000
$ 79,000
Wood
250,000
280,000
Pellet
112,000
101,000
Determine the value of the company"s inventory under the lower-of-cost-or-market approach.
Determine whether cost or market value is lower for each inventory type.
Sum the lowest value of each inventory type to determine the total value of inventory.
