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Armstrong Corporation manufactures bicycle parts. The company currently has a $19,100 inventory of parts that...

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Accounting

Armstrong Corporation manufactures bicycle parts. The company currently has a $19,100 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for $6,900, or modified for $9,700 and sold for $20,900.

Exercise 14-35 Part 1

Required:

  1. Identify the relevance of the data given in the exercise to the decision about what to do with the obsolete parts.

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2.

Exercise 14-35 Part 2

2-a. Calculate the benefit under each alternative for disposing of the obsolete parts.

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2-b. How should the obsolete parts be disposed?

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Current sales value for unmodified parts Sales value for modified parts Modification costs Current book value of inventory Benefit if parts are sold without modification | Net benefit if parts are sold after being modified How should the obsolete parts be disposed

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