The LCM rule compares original cost to current replacement cost to determine the amount at which inventory should be valued.

Question

Quizplus · Accepted Answer

The LCM (lower of cost or market) rule is a method of inventory valuation that compares the original cost of an item with its current replacement cost. The lower of the two values is used to determine the amount at which the inventory should be valued on the balance sheet. So, the given statement is true.

The LCM Rule Compares Original Cost to Current Replacement Cost