U.S.GAAP specifies that, in the context of inventories, market means
A)replacement cost, only.
B)net realizable value, only.
C)replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.
D)replacement cost, except that market may not exceed net realizable value and may not be less than present value of future cash flows.
E)replacement cost, except that market may not exceed net realizable value and may not be less than the total amount of undiscounted future cash flows.

Question

Quizplus · Accepted Answer

U.S. GAAP specifies that market refers to replacement cost, except that market value cannot be higher than the net realizable value and cannot be lower than the net realizable value after reducing a normal profit margin. This is known as the lower of cost or market (LCM) rule.

USGAAP Specifies That, in the Context of Inventories, Market Means