If a company holds inventory of a natural resource on its balance sheet, be it oil, lithium, uranium, steel or whatever and it mentions in the annual report that the company records the value either at cost or market value whichever is lower, would this mean that if the natural resource cost $30 to produce or purchase but the market value is $40, it would be recorded as $30?
So what would happen if the market value of the natural resource shoots up from $40 to $100? Would it still show up as $30 on the balance sheet but in reality it would be worth $100?
And this would be a good thing right? A price shoot up of the natural resource could in this situation instantly turn the fortunes of a struggling company around?
Thanks in advance