Damaged and obsolete goods:
A)Are never included in inventory.
B)Are included in inventory at their full cost.
C)Are included in inventory at their net realizable value.
D)Should be disposed of immediately.
E)Are assigned a value of zero.

Question

Quizplus · Accepted Answer

Damaged and obsolete goods are included in inventory at their net realizable value, which is the estimated selling price less any costs of completion, disposal, and transportation. This reflects the true value of the goods and is required by generally accepted accounting principles (GAAP). Including them at full cost or assigning a value of zero would result in overstating or understating the inventory value. Disposing of them immediately may also not be the best course of action, as there may still be some value that can be salvaged through alternative uses or sales channels.

Damaged and Obsolete Goods