The December 31,2016 inventory of Gwynn Company consisted of three products, for which certain information is provided below. Products   Original   Replace    Estimated    Expected    Normal Profit                     cost         cost        Disposal       Selling         on sales                                                       cost           Price A                 $25            $22           $6.5           $40               20% B                 $42            $40            $12           $48               25% C               $120          $115            $25         $190              30% Instructions Compute the inventory valuation that should be reported for each product on December 31, 2016. ( I ) The lower-of-cost-or-n et realizable value (2) The lower-of-cost-or-market

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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.