Asked by Chelsea Lewis on Jun 08, 2024
Verified
GAAP defines market for lower-of-cost-or market essentially as
A) net realizable value.
B) estimated selling price in the ordinary course of business.
C) replacement cost.
D) replacement cost less costs of disposal.
Lower-Of-Cost-Or-Market
A conservative approach to valuing and reporting assets, where the value reported is the lower of either the cost to buy or produce the asset, or its market value.
- Clarify the notions of lower-of-cost-or-market and net realizable value, detailing their implementation in the appraisal of inventory.
Verified Answer
CV
Christopher ValadezJun 09, 2024
Final Answer :
C
Explanation :
IFRS also defines market as replacement cost, but does not provide guidance on how to calculate costs of disposal. Therefore, the answer is C as it is the only option that is applicable to both GAAP and IFRS.
Learning Objectives
- Clarify the notions of lower-of-cost-or-market and net realizable value, detailing their implementation in the appraisal of inventory.
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