Replacement cost is the designated market value used to compare to cost in determining lower-of-cost-or-market when its relationship to the items shown below is
$\begin{array}{cc}
& \text {Net Realizable Value} & \text {NRV less Normal Profit }\\end{array}$
A)$\begin{array}{cc}&&&\text { Lower }&&&&&& \text {Higher }\\end{array}$
B)$\begin{array}{cc} &&& \text {Higher }& &&&&&\text {Higher }\\end{array}$
C)$\begin{array}{cc}&&& \text {Higher} &&&&&&\text { Lower} \\end{array}$
D)$\begin{array}{cc}&&& \text {Lower }&&&&&&\text { Lower }\
\end{array}$

Question

Replacement cost is the designated market value used to compare to cost in determining lower-of-cost-or-market when its relationship to the items shown below is 
$\begin{array}{cc}
 & \text {Net Realizable Value} & \text {NRV less Normal Profit }\\end{array}$
A)$\begin{array}{cc}&&&\text { Lower }&&&&&& \text {Higher }\\end{array}$
B)$\begin{array}{cc} &&& \text {Higher }& &&&&&\text {Higher }\\end{array}$
C)$\begin{array}{cc}&&& \text {Higher} &&&&&&\text { Lower} \\end{array}$
D)$\begin{array}{cc}&&& \text {Lower }&&&&&&\text { Lower }\
\end{array}$

Quizplus · Accepted Answer

Replacement cost is compared to NRV less normal profit to determine lower-of-cost-or-market. If replacement cost is lower than NRV less normal profit, then the inventory is written down to replacement cost.

Replacement Cost Is the Designated Market Value Used to Compare Net Realizable ValueNRV less Normal Profit \begin{array}{cc} & \text {Net Realizable Value} & \text {NRV less Normal Profit }\\\end{array}​Net Realizable Value​NRV less Normal Profit ​

Replacement Cost Is the Designated Market Value Used to Compare $\begin{array}{cc} & \text {Net Realizable Value} & \text {NRV less Normal Profit }\\\end{array}$