ACCT 3001 Chapter : Chapter 9 Summary By Objective

Many companies use the lower-of-cost-or-market to value inventory. They compare the current value of their inventory with its historical cost and adjust the value, if necessary, to ensure the inventory is booked at the lower of the two values. Argue why inventories are valued using the "lower of cost or market" method. Evaluate at least two arguments

Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the use of the LCNRV method of valuing inventories?

Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the use of the LCNRV method of valuing inventories?