Assume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory: TIP: Inventory write-downs do not affect the cost of goods available for sale. Instead, the effect of the write-down is to reduce ending inventory, which increases Cost of Goods Sold and then affects other amounts in the income statement. Required: 1. Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. 2. Compare and explain the LCM/NRV effect on each amount in the income statement that was changed in requirement 1. Required 1 Required 2 Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. SMART COMPANY Income Statement (LCM/NRV basis) For the Year Ended December 31 \begin{tabular}{|c|c|c|} \hline Sales Revenue & & \\ \hline Cost of Goods Sold: & & \\ \hline Beginning Inventory & & \\ \hline Purchases & & \\ \hline Goods Available for Sale & & \\ \hline Ending Inventory & & \\ \hline Cost of Goods Sold & & \\ \hline Gross Profit & & \\ \hline Operating Expenses & & \\ \hline Income from Operations & & \\ \hline Income Tax Expense \end{tabular} 
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