GAAP allows a company to report its inventory above cost with justifiable exceptions which include the inability to determine a cost.

Question

Quizplus · Accepted Answer

GAAP's guidelines for valuing inventory include the "lower of cost or market" method, which allows a company to report its inventory above cost in certain circumstances, such as when determining a cost is not possible. This is consistent with the principle of conservatism, which encourages companies to err on the side of caution when reporting financial information.

GAAP Allows a Company to Report Its Inventory Above Cost