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Inventory
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6 Months Ended | ||||||||||||||||||||
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Jun. 30, 2013
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| Inventory [Abstract] | |||||||||||||||||||||
| Inventory |
5. Inventory
All components of inventory are valued at the lower of cost (first-in, first-out) or market. We adjust inventory to market value when the net realizable value is lower than the carrying cost of the inventory. Market value is determined based on estimated sales activity and margins.
During the three-month period ended June 30, 2013, we capitalized $545,000 of inventory costs associated with our Lymphoseek product. During the three-month period ended June 30, 2012, we did not capitalize any such costs. During the six-month periods ended June 30, 2013 and 2012, we capitalized $1.1 million and $525,000, respectively, of inventory costs associated with our Lymphoseek product. During the six-month period ended June 30, 2012, we wrote off $89,000 of previously capitalized Lymphoseek inventory due to the consumption of the Lymphoseek material for product testing purposes. During the three-month periods ended June 30, 2013 and 2012, and the six-month period ended June 30, 2013, we did not write off any such costs.
The components of inventory as of June 30, 2013 and December 31, 2012, net of reserves of $0 and $308,000, respectively, are as follows:
We estimate a reserve for obsolete inventory based on management’s judgment of probable future commercial use, which is based on an analysis of current inventory levels, estimated future sales and production rates, and estimated shelf lives. During the six-month period ended June 30, 2012, we recorded an obsolescence reserve for $339,000 of Lymphoseek inventory due to changes in our projections of the probability of future commercial use for the specific lots previously capitalized.
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