Which statement concerning lower of cost or market (LCM) is incorrect?
A) LCM is an example of a company choosing the accounting method that will be least likely to overstate assets and income.
B) Under the LCM basis, market does not apply because assets are always recorded and maintained at cost.
C) The LCM basis uses current replacement cost because a decline in this cost usually leads to a decline in the selling price of the inventory item.
D) LCM is applied after one of the cost flow assumptions has been applied.

Question

Quizplus · Accepted Answer

Under the LCM basis, market does apply because it involves comparing the market value (current replacement cost) to the cost to determine the lower value for reporting inventory.

Which Statement Concerning Lower of Cost or Market (LCM) Is