Which of the following is true regarding the application of lower-of-cost-or-market method under international accounting standards?

Question

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Under international accounting standards, the lower-of-cost-or-market method requires inventory to be recorded at the lower of cost or net-realizable value (NRV). NRV is the estimated selling price of the inventory less estimated costs of completion and selling expenses. This is different from U.S. GAAP, which defines market value as replacement cost or net-realizable value, whichever is lower. However, the IASB has stated that the use of replacement cost is acceptable if it approximates NRV.

Which of the Following Is True Regarding the Application of Lower-Of-Cost-Or-Market