CHAPTE5 ACCOUNTING FOR INVENTORY.ppt

* * * * * * * * * * * * * * * * * * * * 5-* Lower of Cost or Market (LCM) Inventory must be reported at lower of cost or market. Applied three ways: separately to each individual item. to major classes or categories of assets. (3) to the whole inventory. Market is defined as current replacement cost (not sales price). Consistent withthe conservatismprinciple. 5-* Lower of Cost or Market (LCM) To illustrate lower of cost or market, assume The Mountain Bike Company has in ending inventory 100 t-shirts purchased at a cost of $14 each. ? 5-* 5-* LO 3 Explain how fraud can be avoid