The inventory of LA VIDA Company at the end of the year is to be recorded at the lower of cost and net realizable value . Ending inventory data per unit are as follow: Item Unit Cost Est. Sales Price Cost of Disposal A 200 150 200 20 B 130 220 300 100 C 150 120 180 30 D 300 180 150 30 Determine the inventory value applying the lower of cost and net realizable value.

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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.