A company values its inventory at lower of cost and net realizable value (NRV).It paid $250 for, and still has on hand, 10 units that it expects to sell for $400 less selling costs of $40.Which of the following statements is true related to these goods in this period?
A)The company recognizes $400 of selling costs.
B)The inventory is valued at $2,100.
C)The inventory is valued at $2,500.
D)The inventory is valued at $3,600.

Question

Quizplus · Accepted Answer

The inventory is valued at the lower of cost and NRV. The cost is $250 per unit, for a total of $2,500. The NRV is $400 less selling costs of $40, or $360 per unit, for a total of $3,600. Therefore, the inventory is valued at $2,500.

A Company Values Its Inventory at Lower of Cost and Net