The lower-of-cost-or-market rule requires a company to report inventories at the lesser of:

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market rule requires a company to report inventories at the lesser of historical cost or current replacement cost, which means that if the market value or replacement cost of inventory falls below its recorded historical cost, the inventory must be adjusted to the lower of the two values. Therefore, choice B (historical cost or current replacement cost) is the correct answer.

The Lower-Of-Cost-Or-Market Rule Requires a Company to Report Inventories at the Lesser