North End Television Services sells and services a variety of high-end home entertainment products. An inventory count is prepared at each year end to verify the information contained in the company's 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 North End's inventory for the year ended June 30, 2011. 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 also included information detailing net realizable value for each item.

Tim Cappelino, the manager of North End, is confused about why there is a difference between historical cost and net realizable value. Tim is not an accountant and is unfamiliar with these terms. He is also wondering which number should be used to value the company's inventory on June 30, 2011.
Required:
For the purposes of this case, assume that the above items represent the total inventory of North End Television Services on June 30, 2011.
a. Define for Tim the meaning of historical cost and net realizable value in the context of inventory valuation.
b. Based on Canadian practice, determine for Tim the value of North End's ending inventory on June 30, 2011.

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Net realizable value per unit S225 Quantity on hand Historical cost Item June 30, 2011 peruni) Sony DVD Player RCA High Definition $125 52-Inch Television Sony High 8 Camorder JVC Surround $1,400 $300 $1,999 $200 Sound System Nikon Digital Camera $600 $190 $900 $395 6