U.S.GAAP specifies that, in the context of inventories, market means replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.

Question

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This statement is true according to the U.S. Generally Accepted Accounting Principles (GAAP) for inventory valuation. The market value of inventory is defined as the replacement cost, but it cannot exceed the net realizable value (the estimated selling price minus the costs of completion, disposal, and transportation) and cannot be lower than the net realizable value minus a normal profit margin.

USGAAP Specifies That, in the Context of Inventories, Market Means