GAAP requires the following
A) ending inventory is written down to market value and may be written up in future periods to its market value.
B) ending inventory is written down to market value and may be written up in future periods to its market value but not above its original cost.
C) ending inventory is written down to market value but cannot be written up.
D) ending inventory is written up and down to market value each reporting period.

Question

Quizplus · Accepted Answer

GAAP requires that ending inventory be written down to market value if it is lower than its original cost. However, it cannot be written up in future periods to its market value. This is known as the lower of cost or market (LCM) rule.

GAAP Requires the Following