In applying the lower of cost or market method to inventory valuation, market is defined as the current replacement cost.

Question

Quizplus · Accepted Answer

According to the lower of cost or market method, market is defined as the current replacement cost of the inventory. This means that if the replacement cost is lower than the original cost of the inventory, the market value is used to value the inventory instead.

In Applying the Lower of Cost or Market Method to Inventory