Answer:
b. $40.
Explanation:
We select the lower of each of the following for reporting purposes.
Cost = $45
Replacement cost = $43
Neat realizable value = Selling price - disposal and completion costs
NRV = 50 - 10 = $40
We use lower of the values to take into account obsolete inventory or deterioration of inventory and as such the lowest of NRV is used for recording purposes.
Hope that helps.