When the market value of inventory items has declined below its cost,which method would be the most appropriate in complying with GAAP?
A)Gross profit
B)LIFO
C)Lower of cost or market
D)Retail

Question

Quizplus · Accepted Answer

According to GAAP, the inventory should be reported at the lower of cost or market value. Therefore, the most appropriate method in this situation would be the lower of cost or market (LCM) method, which requires adjusting the inventory value to its current market value when the market value declines below the cost.

When the Market Value of Inventory Items Has Declined Below