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E9 -15 AICPA Adapted Dollar-Value LIFO Retail on December 31,

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E9 -15 AICPA Adapted Dollar-Value LIFO Retail on December 31, 2009, Davison Company adopted the dollar-value LIFO retail inventory method. Inventory data for 2010 are as follows:

LIFO Cost Retail
Inventory, 12/31/09 $360,000 $500,000
Inventory, 12/31/10 ? 660,000
Increase in price level for 2010 10%
Cost-to-retail ratio for 2010 70%

Compute the cost of Davison Company’s inventory at December 31, 2010

P9 -1 Lower of cost or Market The Palmquist Company has five different inventory items that it values by the lower of cost or market method. The normal markup on all items is 20% of cost. The following information is obtained from the company’s records:

Item Units Cost Replacement Cost Net Realizable Value
1 500 $10.00 $9.10 $9.20
2 400 8.00 8.10 7.80
3 300 15.00 13.50 14.00
4 200 18.00 12.00 17.00
5 100 25.00 25.50 25.30

1. Compute the lower of cost or market value of each item.
2. Compute the total inventory value if the lower of cost or market is applied to (a) each individual item and (b) the inventory as a whole. Explain the reason for the difference between the two values.
3. Compute the lower of cost or market value for each item if the Palmquist Company uses IFRS.

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