Which of the following statements is incorrect regarding the lower-of-cost-or-net realizable value (LCNRV)?
A) Net realizable value (NRV) is the selling price less estimated costs to complete and estimated costs to make a sale.
B) In most situations, companies price inventory on a total-inventory basis.
C) One of two methods may be used to record the income effect of valuing inventory at net realizable value.
D) Companies use an allowance account, the "Allowance to Reduce Inventory to Net Realizable Value."

Question

Quizplus · Accepted Answer

In most situations, companies price inventory on an item-by-item basis, not a total-inventory basis. This allows for more accurate valuation and identification of slow-moving or obsolete inventory.

Which of the Following Statements Is Incorrect Regarding the Lower-Of-Cost-Or-Net