Jill Tango is studying for the next accounting mid-term examination. What should Jill know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method?

Jill should know the following:
(a) A departure from the cost basis of accounting for inventories is justified when the value of the goods is lower than its cost. The writedown to market should be recognized in the period in which the price decline occurs.
(b) Market means current replacement cost not selling price. For a merchandising company market is the cost at the present time from the usual suppliers in the usual quantities.