When following U.S. GAAP, the lower-of-cost-or-market rule for inventory requires a firm to report ________.
A) the inventory at the higher amount of cost or market on the balance sheet
B) the difference between the cost basis and the market-based measure of inventory as a gain on the income statement
C) the inventory at cost if the market value of inventory is higher than its cost basis
D) the inventory at cost if the market value of inventory is lower than its cost basis

Question

Quizplus · Accepted Answer

Under U.S. GAAP, the lower-of-cost-or-market rule requires inventory to be reported at cost if the market value is higher than the cost basis. If the market value is lower, the inventory is reported at the market value.

When Following U