The lower-of-cost-or-market (LCM)rule violates the historical cost principle.

Name: The lower-of-cost-or-market (LCM)rule violates the historical cost principle.
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Question

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The lower-of-cost-or-market (LCM) rule requires companies to write down the value of inventory to its current market value if it has declined below its historical cost. This violates the historical cost principle, which states that assets should be recorded at their original purchase price.

The Lower-Of-Cost-Or-Market (LCM)rule Violates the Historical Cost Principle