Adjustments to Lower of Cost and NRV
the Controller of Utah

question 25

Essay

Adjustments to lower of cost and NRV
The controller of Utah Corp. has provided you with the following information relating to its inventory:
$$\begin{array} { c c c } \text { Date } & \text { Cost } & \text { Lower of cost and NFN } \\\operatorname { Dec } 31 / 17 & \$ 457,000 & \$ 410,000 \\\operatorname { Dec } 31 / 18 & \$ 615,000 & \$ 555,000\end{array}$$ Utah uses the periodic inventory system, and records its inventory at cost. An allowance account is adjusted at the end of each year to adjust the value of the inventory to the lower of cost and NRV.
Instructions
Prepare the journal entries that Utah would have prepared for its 2019 and 2020 year ends, assuming that 2019 was its first year of operations.

Understand how efficiency and inefficiency are depicted by the PPF.

Associate the production of specific goods with points on the PPF, understanding opportunity costs related to varying production levels.

Comprehend the relationship between unemployment and the PPF.

Grasp the concept of the marginal rate of transformation and how it relates to the PPF slope.

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Definitions:

Predicting Behaviors

The process of forecasting an individual's future actions based on past and present data.

Changing Health Behaviors

The process of modifying personal habits to improve health outcomes, such as adopting a healthy diet or quitting smoking.

Pollution Credits

Tradable permits under regulatory systems designed to control and reduce pollution by giving companies a specific allowance for emissions; companies can buy or sell these allowances to meet environmental regulations.

Biodiesel

A renewable, biodegradable fuel made from vegetable oils, animal fats, or recycled restaurant greases for use in diesel engines.