At year-end, The Appliance Shop has a freezer on hand that has been used as a demonstration model. The freezer cost $390 and sells for $750 when new. In its present condition, the freezer will be sold for $380. Related selling costs are an estimated $20.
At what amount should the freezer be carried in inventory?
A) $375
B) $380
C) $360
D) $400
E) None of the above

Question

Quizplus · Accepted Answer

The freezer should be carried in inventory at the lower of cost or net realizable value (NRV). The cost is $390, and the NRV (selling price minus selling costs) is $360 ($380 - $20). Therefore, the inventory should be valued at $360.

At Year-End, the Appliance Shop Has a Freezer on Hand