Rain Company traded a manual weather machine for an automated weather machine and gave $40,000 cash. The manual machine cost $495,000, had a net book value of $350,000, and a fair value of $360,000. The automated machine was originally purchased by Shine Company for $510,000 and had a net book value of $430,000. It has a fair market value of $450,000. Determine the value of the asset received for Rain and Shine assuming the exchange does not have commercial substance. Please include the appropriate dollar sign and commas (example $25,000).

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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.