Lower-of-Cost-or-Market Rule The cost of Baxter’s inventory at the end of the year was $50,000. Due to obsolescence, the cost to replace the inventory was only $40,000. Net realizable value—what the inventory could be sold for—is $42,000.

Required Determine the amount Baxter should report on its year-end balance sheet for inventory assuming the company follows

(a) U.S. GAAP and

(b) IFRS.

AppendixLO1