The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method of inventory valuation actually decreases net income during the accounting period in which replacement costs decline, as it requires the inventory to be written down to its market value, which is lower than its original cost.

The Use of the Lower-Of-Cost-Or-Market Method of Inventory Valuation Increases