Finch Company Is Preparing the Annual Financial Statements Dated December

question 217

Essay

Finch Company is preparing the annual financial statements dated December 31, 2014. Information about inventory stocked for regular sale follows: Compute the valuation for the December 31, 2014, inventory using the lower-of-cost-or-net realizable value basis.

---

Definitions:

Finance Assets

Financial assets specifically purchased, created, or held for the purpose of generating income through investment or lending activities.

Financial Leverage

The use of borrowed funds with a fixed cost in order to increase the potential return to shareholders.

Incremental

Relating to or denoting an increase or addition, especially one of a series on a fixed scale.

After-tax Cost

The cost of financing or an expense after accounting for the effects of income tax, often used to compare the true costs of financing options.