Unfortunately, during the year, a child suffers an eye injury whilst playing with Toy B, and Baby Hub is sued as aresult. Baby Hub is denying liability, but so far has incurred $25,000 in legal fees. As at 30 June 2021, the lawsuit has not been settled. Due to the bad publicity surrounding Toy B, Baby Hub is now faced with a large volume ofstock that is unlikely to be sold. Baby Hub has a large quantity of stock of Toy B left on hand. The market value of the stock is now lower than the cost price.

Baby Hub seeks your advice as to whether they can revalue the stock at a lower price.

Briefly advise Baby Hub whether they are able to revalue the stock and if so, how they can value it.