On 31 December 2013 the inventory of tennis rackets for Opal Sports Retailers Ltd consisted of:

Required:
a) Determine the total value of closing inventory at 31 December 2013 applying the inventory valuation rules contained in the accounting standards pertaining to Australia.
b) It was noted by the assistant accountant, before the final accounts were prepared, that the RR 116 rackets had been superceded and would have to be discounted heavily to be sold. He considered that their expected sales value would be about $10 each. Discuss the effect of this additional information on the valuation of item RR 116 and on the net profit and on the balance sheet of Opal Sports Retailers Ltd.

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Racket Type Quantity FIFO cost 42 52 LIFO cost LL 901 TT 458 RR 116 17 20 137 53 34