Inventories are carried in the accounting records at cost, EXCEPT when

Question

Quizplus · Accepted Answer

According to the lower-of-cost-or-market (LCM) rule, inventories are carried on the accounting records at cost, unless the market value of the inventory falls below its acquisition cost or the inventory is damaged. In such cases, the inventory must be written down to its market value. Therefore, both options A and B are correct, making C the best choice. Option D is incorrect as a rising market price does not affect the carrying value of inventory.

Inventories Are Carried in the Accounting Records at Cost, EXCEPT