Describe the purpose of lcm rule and accounting convention

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The lower of cost or market (LCM) rule is used in the valuation of inventories. The LCM rule explains that if the inventory's value decreases below its original cost, the inventory must be written down and a loss must be recognized.

Discuss the purpose of the LCM rule and the accounting convention that supports the rule.

Do you think that this rule has some weaknesses? Please discuss your reasoning.

Reference no: EM13395381

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