In conversation with the president of Widget Tek Inc., you have learned that much of the company$$s inventory consists of older Widget Tek Inc. models. These older models sell for less than the newer Widget Tek Inc. models, but customers strongly prefer the newer models. The company believes that the net realizable value of the older inventory is less than its value in the subsidiary inventory ledger.

Considering all of the information you have about Widget Tek Inc., answer the following questions.

$1.$ To better account for the older inventory, the president of Widget Tek Inc. wonders whether the inventory should be valued using a different method. Do you agree, and why or why not?

because

will

$.$

$2.$ Will a change in inventory method increase a company$$s net income on its financial statements?

$.$

$3.$ When is inventory not valued at cost$?$