A. When inventory has been determined to be obsolete, it should be valued at the lower of cost or market. If market value is lower than historical cost, the amount used for the market value is normally net realizable value, which is the expected selling price less costs to sell.

B. Obsolete materials should be stored in an area that is separate from usable inventory.

C. There is no such rule. While sorting, treating and packaging may be appropriate in some cases, in other cases this would not be appropriate because the costs of these actions may be more than the inventory could be sold for.

D. An accountant or auditor is not the appropriate person to determine when inventory is obsolete. That determination should be made by someone with the necessary knowledge to make the determination. Furthermore, the person who makes the determination of inventory's usability should be a different person from the person who has custody over the inventory and also should be a different person from the one who authorizes its disposal. Otherwise, a person with the authority to declare inventory unusable and therefore valueless might subsequently "dispose" of it by selling it and pocketing the proceeds.