Respuesta :
Lower of cost or market: is given in the following way
Explanation:
- The lower of cost or market rule states that a business must record the cost of inventory at whichever cost is lower – the original cost or its current market price. This situation typically arises when inventory has deteriorated, or has become obsolete, or market prices have declined.
- When applying the lower - of - cost - or market rule, market value generally refers to: current replacement cost of the inventory. Under the disclosure principle, the inventory accounting method must be described in the footnotes.
- Lower of cost or market (LCM) is an inventory valuation method required for companies that follow U.S. GAAP. GAAP is a comprehensive set of accounting practices that were developed jointly by the Financial Accounting Standards Board (FASB) and the.
- Lower of cost or market rule requires that inventory be reported on financial statements at historical cost or market value whichever is lower. Market value generally means the current replacement cost of the inventory.
