Montana co. has determined its year-end inventory on a fifo basis to be $630,000. information pertaining to that inventory is as follows: selling price $ 600,000 costs to sell 34,000 replacement cost 541,000 what should be the reported value of montana’s inventory?

reported value of Montana’s inventory is $566000

Explanation:

given data

Cost as per FIFO = $630,000

Selling price = $ 600,000

Costs to sell = 34,000

Replacement cost = 541,000

to find out

What should be the reported value of Montana’s inventory

solution

we get here Net Realizable value

Net Realizable value NRV = Selling price - costs to sell

NRV = 600,000 - 34,000

NRV = $566000

so

we know Inventory should be reported at lower of Cost or NRV

so here Replacement cost is lower than NRV

but lowest that can be reported is lower of NRV & Cost

so that floor is the NRV $566000

so reported value of Montana’s inventory is $566000