If the cost of an item of inventory is $60 and the current replacement cost is $65,the amount included in inventory according to the lower-of-cost-or market method is:
A)$5.
B)$60.
C)$65.
D)$125.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method states that inventory should be reported at the lower of its original cost or its current replacement cost. In this case, the cost of the item is $60 and the replacement cost is $65. Therefore, the amount included in inventory would be the original cost of $60, as it is lower than the replacement cost.

If the Cost of an Item of Inventory Is $60