alleryInventory is valued at the lower of cost and:
ANet realisable value
BReplacement value
COriginal purchase cost
DFuture expected price
Answer & Solution
Correct answer: A. Net realisable value
1. The principle of conservative accounting requires inventory to be measured at the lower of cost and net realisable value (NRV).
2. NRV equals estimated selling price less estimated costs of completion and sale.
3. Replacement value applies only as NRV proxy for raw materials in some cases.
_Source: ICAI BoS Foundation Paper 1, Ch 4 "Inventories", §3 ¶1_
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