The Net Carrying Value of Lan Co.'s Inventory
Explanation:
Closing inventory as assessed: Lan Co. determined its inventory to be $258,000 based on the LIFO basis.
Replacement cost of this closing inventory: The current replacement cost of the inventory was $230,000.
Selling Price of this inventory: Lan estimates that it could sell the inventory for $275,000.
Disposal Cost: The disposal cost is $14,000.
Net sales revenue from this inventory = $275,000 - $14,000 = $261,000
Less: Regular operating margin = $10,000
Value as per sales = $261,000 - $10,000 = $251,000
Closing inventory as per IFRS is to be valued at cost or Net Realizable Value, or Replacement Value whichever is less. Here, the least value is $230,000 which is the replacement value.
Final Answer: Value of closing inventory = $230,000
The net carrying value of Lan Co.'s inventory is $251,000.