Question

When applying lower of cost or market under IFRS, market is defined as: Multiple Choice the middle value among the above three alternatives. replacement cost. net realizable value less normal markup. net realizable value.

Answer 1

The correct answer is letter "D": net realizable value.

Step-by-step explanation:

The Lower of Cost or Market (LCM) method records inventory whether at market value or historical cost which is the costs at which the inventory was purchased. LCM can be used with the Generally Accepted Accounting Principles (GAAP) and the International Financial Recording System (IFRS).

When used with the IFRS, the term "market" means "net realizable value" which is the value of the inventory that can be realized on the sale minus the cost associated with the re-sale of the inventory or its disposal.