CE 2

Naughty Dog Disc Golf Show uses the lower-of-cost-or market basis for its inventory. The following data are available at December 31

Item Unit Unit Cost Market Value

Baskets:

Innova 15 $190 $200

Discraft 25 175 160

Disc bags:

Lightning 30 20 16

Wham-o 28 30 28

Instructions

(a) Determine the amount of the ending inventory by applying the lower- of- cost- or-market basis.

(b) When determining "lower of cost or market", what is "market? Why is defined in this way?