Accounting for Inventory Transactions with Purchase Commitments inventory. The company uses the FIFO method to account for inventory. Assume Moss Company uses a periodic inventory system. Required a. The cost of subassemblies has declined, and the estimated net realizable value is now $2,040,000 on December 31 of Year 1 . Prepare any year-end entry required for this cost decline. b. The subassemblies are received in Year 2 when the net realizable value is estimated at $2,040,000. The contract was paid in full in cash. Prepare the required purchase entry in Year 2