Which of the following methods of applying the lower-of-cost-or-market rule will result in the fewest write-downs of inventory?
A)Each individual inventory item.
B)Average of cost of goods sold for the past three years.
C)Major classes or categories of inventory.
D)The entire stock of inventory in aggregate.

Question

Quizplus · Accepted Answer

Applying the lower-of-cost-or-market rule to the entire stock of inventory in aggregate allows for offsetting lower market values of some items with higher market values of others, resulting in fewer write-downs compared to evaluating each item or category individually.

Which of the Following Methods of Applying the Lower-Of-Cost-Or-Market Rule