Bean Bags is required to compare the value of its trading stock on hand at year end and at the start of the year under s 70-35. As its stock on hand at year end is greater than stock on hand at the start of the year (nil), the difference is included in the company's assessable income. To minimise its tax liability, Bean Bags should value the stock at the lowest value possible. Bean Bags has 3 options in valuing the stock - cost, market selling value or replacement value. Cost As Bean Bags is unable to determine which bean bags are on hand at 30 June, it can value the stock using either the FIFO or average cost methods to determine the 'cost'. Under the FIFO method, it is assumed that the remaining 1000 bean bags were purchased on 18 March and therefore, the cost would be $11 1000 = $11,000. Under the average cost method, the average cost of the bean bags would be (1000 x $10 + 5000 x $15 + 2000 x $11) / 8000 = $13.38. The total cost of the remaining bags would be $13.38 x 1000 = $13,380. Market selling value The value of the remaining bean bags under the 'market selling value' method would be 1000 x $25 = $25,000. Replacement cost The value of the remaining bottles under the 'replacement cost' method would be 1000 x $13 = $13,000. As Bean Bags wants to minimise its tax liability this year, it should value its stock at $11,000 using the FIFO approach under the 'cost