The major criticism of the lower of cost or market rule for valuation of inventory is that

Q: A positive price-to-book ratio indicates something is wrong with a company's use of its assets. True…

A: In the world of finance and investing, numerous metrics and ratios are utilized to evaluate the…

Q: To hold back unrealized profit in ending inventory, cost of goods sold is decreased. True or False?

A: Unrealized profits in the literal sense means those profits that are not realized yet. Unrealized…

Q: In general it argued that the lower of cost of market rule is supported most closely by which of the…

A: The lower of cost or market rule is related to valuing the inventory, the company should value the…

Q: Gross selling price includes: I. the amount of the seller's debt assumed by the buyer. II. the fair…

A: Selling price means the rate at which the goods are sold or services are provided by the…

Q: Borrowing costs a. None of these answers are correct. b. must only be included in inventory cost if…

A: Borrowing costs refer to the interest and other costs incurred by a company when it borrows funds to…

Q: Which of the following is not a disadvantage of using the FIFO cost flow assumption? includes all…

A: Lets understand the basics.There are various methods follow to calculate inventory balance. It…

Q: Why does Target feel that the retail inventory method will result in inventory beingvalued at the…

A: LCM (Lower of Cost or Market) approach:   It is an approach that values the inventory at historical…

Q: Which one of the following is not a disadvantage of the specific identification method of inventory…

A: Under specific identification methods of inventory, specific inventory movement is measured. So it…

Q: An overstatement of ending merchandise inventory in the current period results in an understatement…

A: COST OF GOODS SOLDCost of Goods Sold States that the Amount of Cost Included in the Number of Units…

Q: The procedure selected to calculate the cost of the ending inventory has absolutely no effect on the…

A: Eliminating the incorrect option:The method chosen to calculate the cost of ending inventory does…

Q: Lower of cost or market is an attribute used for the:   a. initial measurement of accounts…

A: Lets understand the basicsas per IAS 2 "Inventory" inventory should initially be recorded at cost.…

Q: Assuming rising inventory prices, which statement is correct? Group of answer choices A. FIFO…

A: INTRODUCTION: First in, first out, or FIFO, is a technique of valuing assets or inventories. The…

Q: Do you agree with the following statements? Express your opinion on each statement.

A: 1: This statement is correct  This can be explained with the help of example: Suppose closing stock…

Q: Do you agree with the following statements? Express your opinion on each statement. An inventory…

A: 1) This statement is correct  This can be explain with the help of example: Suppose closing stock is…

Q: What is inventory shrinkage? The difference between product cost and retail selling price. The…

A: Inventory shrinkage refers to the discrepancy between the perpetual system generated Inventory level…

Q: In a period of falling prices, which inventory method would result in the lowest tax burden? a.…

A: FIFO is first in first out which means inventory bought first is sold first.LIFO is last in first…

Q: If beginning inventory is understated, then: a. goods available for sale will be overstated. b.…

A: The cost of goods sold represents the direct costs of producing goods or purchasing them for resale…

Q: Solve this problem with question

A:

Q: Analysts must recognize that the use of the specific identification method to value inventory has a…

A: The amount, by which the Inventory Level exceeds the Closing Inventory level is referred to as the…

Q: One of the significant remaining differences between U.S. GAAP and IFRS is the treatment of…

A: Inventory valuation method includes: FIFO Method LIFO Method Weighted average method FIFO Method -…

Q: Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending…

A: LIFO method last in first out so LIFO method take last cost of product into account so do not older…

Q: Which of the following statements Is/are true?

A: Inventory valuation: Inventory valuation is a method used or followed for the calculation cost of…

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.