Some companies attribute inventory write-downs directly to the cost of goods sold, and some companies use other expense accounts for this purpose, so write-downs are not usually identified separately on financial statements. Market value generally equals the replacement cost of inventory. Items sometimes decrease in value because they become less expensive to purchase. In other words, the market value drops. The lower-of-cost-or-market (LCM) rule is used to determine the value of merchandise inventory. Suppose a retail computer store purchases one hundred computers for $3,000 each. After the store
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