Oro Corporation has a branch in Cebu. The branch reported income of P130,000 for 2020. The branch has a balance in its Home Office account the year-end, after closing of P765,000. Branch income has not been recorded by Oro's home office. During the year, Oro shipped inventory to the branch at a price of P160,000: Oro's original cost was P90,000. All but 45 percent of the inventory has been resold to unrelated parties by year-end. How much is the adjusted branch income

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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.