The damaged merchandise that can be sold only at prices below cost should be valued at Net realizable value.
In accounting, the Net realizable value is basically the cash that a company expects to receive based on the eventual sale of an item after deducting any associated costs.
In the case, the damage merchandise can be sold, but it will be at lower price compared to the normal price.
Therefore, the valuation method of Net realizable value is what the damaged merchandise should be valued at.
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