Wascana Photography Services sells and services a variety of high-end photography equipment for professional photographers. An inventory count is conducted each year end to verify the information contained in the companys perpetual inventory system. Once counted, the inventory is valued for the purposes of preparing the financial statements. The following inventory items represent a cross-section of Wascanas inventory for the year ended June 30, 2020. Because computerized records are maintained and a specific identification method of inventory is applied, the historical cost of each inventory item can easily be determined. In addition to the historical cost, the store management has included information detailing net realizable value for each item.

Item		Quantity on hand June 30, 2020		Historical cost (per unit)			Net realizable value (per unit)
Nikon D3100 body		4		$400			$350
Nikon 5200 with zoom lens		2		$1,500			$1,600
Nikon 80-200 mm/2.8 lens		2		$1,100			$1,150
Canon EOS 60 body		2		$1,600			$1,900
Canon EF 24-70 mm/2.8 zoom lens		1		$2,500			$2,300
Olympus E5 body		3		$1,900			$1,700
Pentax K3 body		6		$1,050			$1,300

Aleksander Dudyk, the manager of Wascana, is confused about why there is a difference between historical cost and net realizable value. Aleksander is not an accountant and is unfamiliar with these terms. He is also wondering which number should be used to value the companys inventory on June 30, 2020. For the purposes of this case, assume that the above items represent the total inventory of Wascana Photography Services on June 30, 2020.

Explain the meaning of historical cost and net realizable value in the context of inventory valuation for Aleksander.