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

Question

Quizplus · Accepted Answer

In applying the lower of cost or market method, market is defined as the current replacement cost. This means that if the market price or replacement cost of inventory is below its recorded cost, the inventory must be written down to reflect the lower market value.

In Applying the Lower of Cost or Market Method to Inventory