A company holds 200 units of a phone bought at $100 each whose current value has fallen to $60 each, plus 200 units of another phone bought at $100 each now valued at $110 each. Under lower of cost and net realisable value, what is total reported inventory?

1. First model: cost $\$100$ is lower than current value $\$110$, so use cost: $200 \times \$100 = \$20,000$. 2. Second model: current value $\$60$ is lower than cost $\$100$, so use the lower value: $200 \times \$60 = \$12,000$. 3. Total reported = $\$20,000 + \$12,000 = \$32,000$. 4. Rule out $\$40,000$: that values both models at cost, ignoring the write-down on the second. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.3 "Lower of Cost or Net Realisable Value", p.124_