H.T. Tan Company is preparing the annual financial statements dated December 31 of the current year. Ending inventory information about the five major items stocked for regular sale follows: Item Quantity on Hand 68 ENDING INVENTORY, CURRENT YEAR Unit Cost When Acquired (FIFO) Net Realizable Value (Market) at Year-End 98 28 $ 19 47 $ 22 7232 37 59 55 32 12 17 Required: Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. ABCDE 88 368 Total Net Value Lower of Cost or NRV Item Quantity Total Cost Realizable 68 98 28 88 368 Total $ 0 $ 0 $ 0 ABCDE

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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.