When comparing the lower of cost to marketthe appropriate market value is determined before comparing it to the costthe purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains Othe purpose of the floor is to prevent an excessive gain from being recognized in the futurethe process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross marginO000

The inventory costing approach known as the lower-of-cost-or-market (LCM) values inventory at the…

When comparing the lower of cost to market the appropriate market value is determined before comparing it to the cost the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains the purpose of the floor is to prevent an excessive gain from being recognized in the future the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin

When comparing the lower of cost to market the appropriate market value is determined before comparing it to the cost the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains the purpose of the floor is to prevent an excessive gain from being recognized in the future the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Initial Margin and maintenance margin ensure that the clearing house will never be at a loss. Do you agree?
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