In applying the lower of cost and net realizable value rule,the inventory of apparel would be valued at:
A)$108,000.
B)$ 90,000.
C)$110,000.
D)$99,000.

Question

Quizplus · Accepted Answer

The lower of cost and net realizable value is used to value inventory. In this case, the cost of the apparel inventory is $100,000 and the net realizable value is $90,000, which is the estimated selling price of inventory minus the estimated costs of completion and disposal. Therefore, the inventory should be valued at $90,000, which is lower than the cost of $100,000. Hence, the best choice is B.

In Applying the Lower of Cost and Net Realizable Value