If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is
A) $15
B) $60
C) $75
D) $135

Question

Quizplus · Accepted Answer

The lower of cost or market rule dictates that inventory should be reported at the lower value between its original cost and its current market price. In this case, the original cost is $60 and the current replacement cost is $75, so the inventory should be reported at $60, the lower amount.

If the Cost of an Item of Inventory Is $60