Jaffa Company prepared its annual financial statements dated December 31 of the current year. The...
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Jaffa Company prepared its annual financial statements dated December 31 of the current year. The company applies the FIFO nventory costing method; however, the company neglected to apply lower of cost or net realizable value to the ending inventory. The oreliminary current year income statement follows: Assume that you have been asked to restate the current year financial statements to incorporate lower of cost or NRV. You have developed the following data relating to the current year ending inventory: Required: 1. Prepare the income statement to reflect lower of cost or net realizable value valuation of the current year ending inventory. Apply ower of cost or NRV on an item-by-item basis. 2. Compare the lower of cost or net realizable value effect on each amount that was changed on the income statement in requirement 1). Prepare the income statement to reflect lower of cost or net realizable value valuation of the current year ending inventory. Apply lower of cost or NRV on an item-by-item basis. Compare the lower of cost or net realizable value effect on each amount that was changed on the income statement in requirement (1). (Decreases should be indicated by a minus sign.)
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