Frazier Ltd is always running short of cash, despite growing sales volumes and its current assets exceeding its current liabilities. A review of its operations by a consultant finds that a considerable portion of the company's inventory is obsolete stock for which there is limited demand. Further, many of the accounts receivable are overdue by more than 60 days. The accounts receivable and inventory are carried at their gross amount and cost value respectively on the balance sheet. Explain how the accounts receivable and inventory should be valued on the balance sheet. If Frazier Ltd was to apply the correct measurement basis, determine the effect on: 1.) profit and 2.) assets.