Herman Company has three products in its ending inventory. Specific per unit data for each of the products are as follows:

Herman Company has three products in its ending inventory. Specific per unit data for each of the products are as follows:

	Product 1			Product 2			Product 3
Cost	$	20		$	90		$	50
Replacement cost		18			85			40
Selling price		40			120			70
Disposal costs		6			40			10
Normal profit margin		5			30			12

Required:

What unit values should Herman use for each of its products when applying the LCM rule to ending inventory assuming it prepares financial statements according to International Financial Reporting Standards?   Explanation: According to IFRS, inventory is valued at the lower of cost and net realizable value. Inventory valuation for the three products would be as follows: Product NRV Cost Lower of Cost or Market 1 $ 34   $ 20   $ 20   2   80     90     80   3   60     50     50   Product 3 would be valued at $50 under IFRS, but $48 according to U.S. GAAP.  The inventory values of the other two products would be the same under U.S. and the international standard.