An adjustment to ending inventory under the Lower of cost and net realizable value (LC&NRV)rule would be most likely to be recorded by a company that sells:
A)Plastic storage containers.
B)Paper clips.
C)Body lotion.
D)Designer clothes.

Question

Quizplus · Accepted Answer

The LC&NRV rule requires companies to adjust their inventory to the lower of its cost or net realizable value. This means that if the market value of the goods is lower than what the company paid for them, the company must reduce the value of its inventory on the balance sheet. This adjustment is most likely to occur for companies that sell goods with a high market volatility or that are highly susceptible to price fluctuations. Designer clothes are a good example of such goods, as they can quickly fall out of fashion or become unpopular, leading to a decrease in their market value.

An Adjustment to Ending Inventory Under the Lower of Cost