Lower-of-Cost-or-Net Realizable Value Method The following data refer to the Ian Company’s ending inventory: Item Code Quantity Unit Cost Net Realizable Value ABX 80 $50 $55 TYG 200 38 42 JIL 175 28 24 GGH 90 44 38 Calculate the value of the company’s ending inventory by using the lower-of-cost-or-net realizable value applied to each item of inventory. Ending inventory computed by applying the lower-of-cost-or-net realizable value to each item of inventory is $Answer

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.