Which of the following statements regarding the application of the lower-of-cost-or-market (LCM)rule is true?
A)Generally,market value is greater than replacement cost.
B)When the LCM rule is used,inventories are valued at selling price.
C)The LCM rule is most commonly applied on a total inventory basis because it is a more conservative approach.
D)The LCM rule is an exception to the historical cost principle.

Question

Quizplus · Accepted Answer

The LCM rule, which values inventory at the lower of its historical cost or market value, is an exception to the historical cost principle, which typically requires assets to be recorded at their original cost.

Which of the Following Statements Regarding the Application of the Lower-Of-Cost-Or-Market