In applying the lower of cost or market method to LIFO inventory valuation,market is defined as:
A)Historical cost.
B)Current replacement cost.
C)Current sales price.
D)FIFO.
E)LIFO.

Question

Quizplus · Accepted Answer

In the lower of cost or market method, market is defined as the current replacement cost of the inventory. For LIFO inventory valuation, the inventory is valued based on the most recent costs, which may not reflect its true market value. Therefore, the market value is determined based on the current replacement cost to ensure that inventory is not overvalued.

In Applying the Lower of Cost or Market Method to LIFO