Switzer, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date, each computer has a net realizable value of $400. What value should Switzer, Inc., report for the computers at the end of the year? A : $7,200 B : $4,800 C : $3,200 D : $2,400

Answer :

Answer:

C. $3,200

Explanation:

As per the normal provisions as contained in US GAAP the inventory of goods is generally valued at cost or NRV whichever is lower, since the cost is more then the Net Realizable Value, the inventory shall be valued at net realizable value.

Although the normal retail price is more than cost but since NRV is less they shall be valued at Net Realizable Value.

Thus, the correct answer is:

8 computers [tex]\times[/tex] $400 = $3,200

If Switzer, Inc. has 8 computers  in which at  the statement date, each computer has a net realizable value of $400. What  value should Switzer, Inc., report for the computers at the end of the year is C : $3,200

Using this formula

Assets value=Number of computer×Net realizable value

Where:

Number of computer=8

Net realizable value=$400

Let plug in the formula

Assets value=8×$400

Assets value=$3,200

Inconclusion If Switzer, Inc. has 8 computers  in which at  the statement date, each computer has a net realizable value of $400. What  value should Switzer, Inc., report for the computers at the end of the year is C : $3,200

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