In the case of a taxpayer who uses the lower-of-cost-or-market inventory method:
A) Either FIFO or LIFO can be used.
B) Excess inventories can be written-off in the year the company decides the goods are overstocked.
C) "Market" means the replacement cost of the goods.
D) Only a. and b. are correct.
E) a., b., and c. are correct.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method values inventory at the lower of its historical cost or its current market value, where "market" refers to the replacement cost of the goods.

In the Case of a Taxpayer Who Uses the Lower-Of-Cost-Or-Market