Answer: b. $10,000 Inventories shall be measured at the lower of cost and net realizable value. This measurement method follows the principle of conservatism, which further means that assets should not be overstated and liabilities should be understated. Thus, in measuring inventories, the two costs that should be compared are the historical cost and the net realizable value. Comparing the $10,000 historical cost and the $10,500 net realizable value, inventories shall be valued at $10,000.