The difference between the cost and market value is considered a loss due to holding inventory.

Question

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The cost of inventory refers to the amount paid or incurred to acquire, produce or improve the inventory. The market value of inventory, on the other hand, refers to the current selling price of the inventory in the ordinary course of business. If the market value of inventory is lower than the cost, the difference is considered a loss due to holding inventory.

The Difference Between the Cost and Market Value Is Considered