Magic Carpets Inc. sells a full line of area rugs, from top quality to bargain basement. Economic conditions have hit the textile industry, and Magic Carpets accountant is concerned that its rug inventory may not worth the amount Magic paid for it.
Information about three lines of rugs is found below: Figure 8.16 Cost Replacement Cost Sales Price Cost to Sell Number in inventory High Flyers $230 $240 $350 $40 80 Midflight 150 120 220 25 125 Under the Radar 100 100 110 20 165
. Determine market value for each type of rug.
Determine lower-of-cost-or-market for each type of rug.
Determine if Magic Carpets has suffered a loss of value on its inventory, and if so, what the amount of loss is