When the market value of inventory items has declined below its cost, which method would be the most appropriate in complying with GAAP?

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According to GAAP, when the market value of inventory items has declined below its cost, the most appropriate method is to use Lower of Cost or market (LCM) method. This method allows a company to report inventory at the lower of its historical cost or the current market value, whichever is lower. This helps in ensuring that the inventory is not overstated on the balance sheet and that any potential losses are recognized in a timely manner.

When the Market Value of Inventory Items Has Declined Below