Question

If the cost of an item of inventory is $49.00 and the current replacement cost is $65.00, what is the amount included in inventory according to the lower of cost or market

Answer 1

Answer: $49.00

Step-by-step explanation:

According to the lower of cost or market (LCM) rule, the cost of inventory recorded by a businessust be at the lower cost between the original cost and the current market price.

Since the cost of an item of inventory is $49.00 and the current market price which is the replacement cost is $65.00, then the amount included in the inventory will be $49.00.