Under the lower of cost or market inventory valuation rule, market value of inventory is defined as: a.Net realizable value. b.Net realizable value minus a normal profit margin. c.The lower of net realizable value or current replacement cost. d.Current replacement cost.

Q: AD, Inc. uses the LIFO-lower of cost or market method to value inventory. If the inventory value is…

A: For financial reporting purposes, will value the inventory in accounting at lower prices or on the…

Q: 5. If a unit of inventory has declined in value below original cost, but the market value exceeds…

A: The procedure of determining the actual value of inventories at the end of the year is known as…

Q: If inventory is being valued at cost and the price level is steadily rising, which of the three…

A: Inventory can be defined as a form of asset which is held by a business firm for resale purposes.…

Q: Net sales minus cost of good sold is equal to cost of ending inventory.   T/F

A: The ending inventory is the amount of inventory left with business at year end.

Q: Lower of cost and net realizable value a. results in the lowest valuation if applied to the total…

A: It is preferable to value the inventory at lower of cost or net realizable value (LCNRV) in…

Q: "Market" is defined in the "Lower-of-cost-or-market" rule required to account for FIFO inventory as:…

A: Inventory- Inventory refers to the items which business kept on hand in order to make the money, it…

Q: Lower-of-Cost-or-Market Method On the basis of the following data, determine the value of the…

A: Lower-of-cost-or-market value: The lower-of-cost-or-market value is a method which requires the…

Q: Under which inventory cost flow assumption is the cost of the most recent purchases likely to remain…

A: Inventory valuation methods include: First-in first-out (FIFO) Method  Last-in first-out (LIFO)…

Q: According to the expense recognition principle, inventory costs are expensed as cost of goods sold…

A: True

Q: Lower-of-Cost-or-Market Method On the basis of the data shown below:   Item Inventory Quantity…

A: Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting…

Q: Lower-of-Cost-or-Market Method On the basis of the following data, determine the value of the…

A: Commodity Cost per unit Market Value per unit Lower of Cost or Market  JFW1 $37  $39  $37   Saw9…

Q: On the basis of the following data, determine the value of the inventory at the…

A: Inventories are recognized lower of cost or market. This rule is applied to inventory item-wise.…

Q: Which inventory valuation method would yield the lowest cost of goods sold in periods of rising…

A: FIFO method in full terms stands for First in First Out,is an important part Accounting.It is…

Q: In a period of rising prices, the inventory cost allocation method that tends to result in the…

A: In the period of rising prices, method resulting in highest net income would be the method under…

Q: If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of…

A: Inventory cost flow assumptions: These are the methods used by the companies to compute the cost…

Q: For valuation of inventory, the lower of cost or market rule may be applied to a. the total…

A: Inventory of the business should be valued by choosing appropriate method. Lower of cost of market…

Q: Which inventory valuation model serves as a middle-of-the-road approach for taxes and income? a.…

A: Under the FIFO and LIFO, the obtained cost of goods sold can be higher or lower than the actual…

Q: On the basis of the following data, determine the value of the inventory at the…

A: Note: Under the Lower of cost or Market method, inventory is valued at the lower of the Cost of the…

Q: On the basis of the data shown below: Item Inventory Quantity Cost per Unit Market Value per Unit…

A: As per  lower of cost or market method, we need to consider inventory value at lower of market value…

Q: Which of the following inventory cost flow assumptions produces the same ending inventory values…

A: Periodic inventory system is a system where inventory records are updated on a periodic basis but in…

Q: T, F. Under the GAAP rule, inventories can be reported at above cost in the balance sheet. T, F. If…

A: Under GAAP rules , inventory is valued at cost or net realizable value which ever is lower due to…

Q: Explain the (a) lower of cost or net realizable value (LCNRV) approach and the (b) lower of cost or…

A: LCNRV (Lower of Cost or Net Realizable Value) approach:   It is an approach that compares the cost…

Q: Lower-of-Cost-or-Market Method On the basis of the data shown below: Inventory Cost per Market Value…

A: The principle is inventory should be valued at lower or cost of reliasable value which ever is lower…

Q: 1. Inventory should be stated at (a) Lower of cost and fair value. (b) Lower of cost and net…

A: Inventory means the stock of goods in which the businessmen deals. Inventory is to be valued as per…

Q: Which of the following inventory cost flow assumptions produces the same ending inventory values…

A: Periodic Inventory System : In periodic inventory system ending balance of inventory will be updated…

Q: Under which method of inventory valuation, the average price used for valuation of goods issued is…

A: Inventory is the material in which the business deal. It is a very important component of company…

Q: Which of the following is equal to the cost of goods sold? a. net purchases plus the excess of…

A: The question is related to cost of goods sold. The cost of goods sold is calculated with the help of…

Q: In a peiod of rising prices, which method would yield the lowest ending inventory, highest net…

A: The inventory valuation method used to evaluate the closing inventory and cost of goods sold on the…

Q: Inventory should be measured at lower of fair value and net realizable value of the inventory.

A: The IAS 2 suggests the requirement for the reporting of the inventories. This states that the…

Q: Which inventory method will result in lower net income in a period of rising prices? Which inventory…

A: First-in-First-Out (FIFO): In this method, items purchased initially are sold first. So, the value…

Q: The process of recording inventory that gives a lower cost of a commodity sold in an income…

A: The inventory can be valued using various methods as LIFO, FIFO and average method.

Q: Explain the lower of cost or market rule for inventory valuation and explain why it is GAAP.

A: Lower of cost or market value for inventory valuation is just a mixture of many accounting…

Q: Lower-of-Cost-or-Market Inventory On the basis of the following data, determine the value of the…

A: Lower-of-cost-or-net realizable value: The lower-of-cost-or-net realizable value (LCNRV) is a method…

Q: he economic order quantity is not affected by the a. cost of purchase-order forms. b. safety stock…

A: The economic order quantity (EOQ) is a company's optimal order quantity for minimizing its total…

Q: Determine the value of the inventory at the lower of cost or market. Apply lower of cost or market…

A: Lower of Cost per Unit or Market Value per Unit As the name saying, we record inventory on lower of…

Q: Which inventory cost flow assumption would consistently result in the highest income in a period of…

A: Inventory valuation is done at the end of the accounting period and different inventory valuation…

Q: Which inventory valuation model serves as a middle-of-the-road approach for taxes and income?…

A: When a corporation values its inventory using FIFO, it reports reduced COGS, which boosts its gross…

Q: Which U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is…

A: Net realizable value: Net realizable value is the net amount of receivables which a business expects…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: Determine the value of inventory based on lower of cost or market price.

Q: On the basis of the following data, determine the value of the inventory at the…

A: Item Cost per unit Market value per unit Lower of cost or market value JFW1 $56 $52 $52 SAW9 28…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: The inventory needs to e valued at lower of cost or market value which is lower.

Q: What is the measurement value of inventory? Select one: a. Expected Value b. Fair Value c.…

A: Inventory are the goods which the businesses held for the sale.

Q: Lower-of-Cost-or-Market Method On the basis of the data shown below:   Item InventoryQuantity…

A: Calculation of value of inventory using lower of cost or market value:

Q: The gross profit method assumes O The beginning inventory plus purchases equal total goods to be…

A: The gross profit indicates the excess amount of revenue over the cost of goods sold and available…

Q: What is the purpose of the lower of cost or net realizable value rule?

A: lower of cost or net realizable value rule(LCNRV method):Inventory should be valued at the lower of…

Q: In a period of falling prices, the use of which inventory cost flow method would typically result in…

A: The inventory valuation is done at the end of the accounting period. Different techniques are…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.