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Unformatted text preview: Companies should use same inventory method from period to period • Disclosure Companies should disclosed inventory method used • Conservatism Companies should “write down” inventory if market price falls below cost Lower-of-Cost-or-Market (LCM) • Inventory should be reported at whichever is lower – cost or market Market = current replacement cost • If cost is lower, no adjustment needed • If market is lower, Inventory is decreased to market value Cost of goods sold is increased...
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This note was uploaded on 06/15/2011 for the course ACCT 23020 taught by Professor Dorff,p during the Spring '08 term at Kent State.
- Spring '08
- Financial Accounting