In the process of adjusting inventory, how can the lower of cost and net realizable value be applied to the ending inventory?
A) The inventory as a whole
B) Current replacement cost
C) Current sales price
D) To groups of similar or related items
E) Purchase price

Question

Quizplus · Accepted Answer

Lower of cost and net realizable value (LCNRV) is typically applied to groups of similar or related items within inventory. This ensures that any items which are outdated, damaged, or otherwise unlikely to sell at their original cost are properly accounted for in the inventory valuation. Applying LCNRV to the inventory as a whole, current replacement cost, current sales price, or purchase price may not result in an accurate reflection of inventory value.

In the Process of Adjusting Inventory, How Can the Lower