Finance - Intermediate Accounting, 11th Edition - Chapter 09 - Inventories-Additional Valuation Issues.pdf

Intermediate Accounting
Eleventh Edition
Chapter 9
Inventories: Additional Valuation Issues
Donald E. Kieso
Jerry J. Weygandt
Terry D. Warfield
Intermediate Accounting
by:
Donald E. Kieso, ., .
KPMG Peat Marwick Emeritus Professor of Accounting Northern Illinois University DeKalb,
Illinois
Jerry J. Weygandt, ., .
Arthur Andersen Alumni Professor of Accounting University of Wisconsin Madison,
Wisconsin
Terry D. Warfield, .
Associate Professor University of Wisconsin Madison, Wisconsin
Copyright © 2004 John Wiley & Sons, Inc. All rights reserved.
John Wiley & Sons, Inc.
111 River St., 6th Floor, Hoboken, NJ 07030
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ii
Intermediate Accounting
Table of Contents
Table of Contents
LOWER OF COST OR MARKET.................................................................................................. 3
Lower of Cost or Market—Ceiling and Floor.......................................................................... 3
How Lower of Cost or Market Works...................................................................................... 5
Methods of Applying Lower of Cost or Market...................................................................... 7
Recording “Market” Instead of Cost......................................................................................... 7
Evaluation of the Lower of Cost or Market Rule.................................................................. 10
VALUATION BASES..................................................................................................................... 12
Valuation  Realizable Value........................................................................................... 12
Valuation Using Relative Sales Value..................................................................................... 13
mitments—A Special Problem....................................................................... 14
THE GROSS PROFIT METH