What is meant by "market" in lower-of-cost-or-market calculations?
A)The amount of gross margin earned by selling merchandise.
B)The amount the goods were sold for during the period.
C)The amount that would have to be paid to replace the merchandise.
D)The amount originally paid for the merchandise.

Question

Quizplus · Accepted Answer

"Market" in lower-of-cost-or-market calculations refers to the amount that would have to be paid to replace the merchandise, also known as replacement cost. It is the lower of the original cost or the replacement cost that is used to value inventory in the financial statements.

What Is Meant by "Market" in Lower-Of-Cost-Or-Market Calculations