the cost amount that should be used in the lower-of-cost-or-market comparison of boots
Presented below is information related to Rembrandt Inc.’s inventory.
(per unit)
Skis
Boots
Parkas
Historical cost
$190.00
$106.00
$53.00
Selling price
212.00
145.00
73.75
Cost to distribute
19.00
8.00
2.50
Current replacement cost
203.00
105.00
51.00
Normal profi t margin
32.00
29.00
21.25
Determine the following: (a) the two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis; (b) the cost amount that should be used in the lower-of-cost-or-market comparison of boots; and (c) the market amount that should be used to value parkas on the basis of the lower-of-cost-or-market.
