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What is the purpose of the lower-of-cost-or-market method

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Reference no: EM131173712

Applying Lower of Cost or Market

You have been asked by the financial vice president (VP) to develop a short presentation on the lower of cost or market method for inventory purposes. The financial VP needs to explain this method to the president because it appears that a portion of the company's inventory has declined in value.

The financial VP asks you to answer the following questions.

1. What is the purpose of the lower-of-cost-or-market method?

2. What is meant by "market"? ( Hint: Discuss the ceiling and floor constraints.)

Reference no: EM131173712

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