For valuation of inventory, the lower of cost or market rule may be applied to

Question

Quizplus · Accepted Answer

The lower of cost or market rule can be applied to each item, the total inventory, or major categories of inventory. This allows for a more accurate valuation of inventory and helps to prevent overstatement of its value on financial statements. The specific choice of application will depend on the nature and complexity of the inventory system used by the company.

For Valuation of Inventory, the Lower of Cost or Market