A company's total cost of inventory was $329,000 and its current replacement cost is $307,000. Under the lower cost or market, the amount reported should be $329,000.

Question

Quizplus · Accepted Answer

The lower cost or market rule requires that inventory be reported at the lower of cost or market value. In this case, since the replacement cost is lower than the original cost, the inventory should be reported at the lower replacement cost of $307,000. Therefore, the amount reported should be $307,000, not $329,000.

A Company's Total Cost of Inventory Was $329,000 and Its