[polymatter]

I'm not sure why you're being downmodded, you're absolutely correct.

IAS 2[1] states "inventories shall be measured at the lower of cost and net realizable value", which is exactly what you said.

IAS is the International Accounting Standards, which is what pretty much all accounts meet. Inventories mean stock. Net realizable value means what you can get for them. US GAAP covers this as well (though I can't find a reference right now).

Showing your inventory at $20 per unit, when you can only expect to make $15 per unit selling them, would be overestimating the value of your stock. A competent auditor wouldn't sign off on your accounts like that.

[1] (http://www.icaew.com/en/library/subject-gateways/accounting-...)

(from a trainee accountant)