Which of the following statements best describes net realizable value when applying the LCM rule?
A)Net realizable value is the selling price less the costs necessary to sell the item.
B)Net realizable value is the selling price plus the costs necessary to sell the item.
C)Net realizable value is the selling price plus the normal profit margin.
D)Net realizable value is the selling price less the normal profit margin.

Question

Quizplus · Accepted Answer

When applying the lower of cost or market (LCM) rule, net realizable value refers to the estimated selling price less the costs necessary to make the sale (e.g. commissions, transportation, etc.). This means that option A is the correct statement.

Which of the Following Statements Best Describes Net Realizable Value