When the market value of inventory items has declined below their cost,which method would be the most appropriate in complying with GAAP?

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According to GAAP, when the market value of inventory items declines below their cost, the lower of cost or market (LCM) method should be used. This method states that inventory should be reported at its original cost or the current market value, whichever is lower. This ensures that the inventory is reported at its true value on the balance sheet, and that any losses due to declines in market value are recognized in a timely manner. Retail, LIFO, and FIFO methods do not specifically address the issue of declines in market value, and therefore are not appropriate in this situation.

When the Market Value of Inventory Items Has Declined Below