Inventory is not permitted to be combined at the book value of the acquiree, so it must undergo a valuation process. Let's walk through the steps of Fair Valuation for these items.
Raw Materials are typically valued at the replacement cost of the Raw Materials inventory. This would be the price that you would pay to replace inventory fully on whatever the principal market for that inventory is.
Work in Process Inventory is valued using the estimated selling price of the items. This should include the selling effort and manufacturing effort costs, as well as a normal profit for these efforts. Costs included in the manufacturing effort include all costs that would normally be inventoriable.
Finished Goods Inventory is valued similarly to Work In Process, with the Estimated Selling Price acting as the baseline for the Fair Valuation. Generally, it can be considered to be the Net Realizable Value of the Inventory, or the selling price (including costs of sale efforts and normal profit on sale).
Allowances: Allowances must be included in the fair valuation of the associated inventory account. Please mark the fair value of any Allowances as 0 and Fair Value the associated account as FV Less Allowance. E.g. Finished goods has a Fair Value of 100,000 with an allowance of 10,000, The inputted value for Finished goods would be 90,000 with an allowance of 0.