Inventory items have to be revalued at ‘lower of cost or net realizable value’. Practically, net realizable value means the amount at which the Company could sell in an open market (selling price).
To answer the question post in #38
1) Value at cost of $2.00. ( as cost of $2.00 is lower than its net realizable value of $2.50)
2) Value at Net realizable value of $1.50 ( as cost of $1.50 is lower than its cost of $2.00)