The lower of cost or market rule for inventory valuation must be applied to only individual items of inventory, not to major categories of inventory or to the entire inventory.

Question

Quizplus · Accepted Answer

The statement is false. The lower of cost or market rule can be applied to major categories of inventory or the entire inventory if the categories have similar characteristics and cost structures. This is known as the "group method" of applying the lower of cost or market rule.

The Lower of Cost or Market Rule for Inventory Valuation