Auditing and Assurance service Essay Example | Topics and Well Written Essays - 500 words

Auditing and Assurance service - Essay Example However, due to lack of assessing the net realisable value with fair degree of accuracy, firms often stick to using cost as the main method of valuing inventories. For a firm working in Information Technology such as Dynamic Data, the issue of valuing inventories at cost or net realizable values is critical because the industry is highly volatile and dynamic in nature with technology becoming obsolete at much higher speed as compared to other traditional goods. Thus there are different factors which compel firms to use cost as the basis of valuing their inventories and reporting them into their financial statements. As discussed in the case study that there are some news articles which indicate that the technology used in different products by Dynamic Data may be good enough to serve the current needs however, they are adequate enough to meet future demands therefore there are chances that their market value may come down very fast.