Why are inventories valued at the lower of cost

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Reference no: EM133379696

Questions

1. Where there is an evidence that the utility of inventory goods, as part of their disposal in the ordinary course of business, will be less than cost, what is the proper accounting treatment

2. Why are inventories valued at the lower of cost or net relizable value (LCNRV)? What are the arguments against the use of the LCNRV method of valuing inventories

3. Explain the rationale for the ceiling and floor in the lower-of-cost or-market method of valuing inventories .

4. What factors might call for inventory valuation at sales prices (net realizable value or market price)

5. What are the major uses of the gross profit method ?

Reference no: EM133379696

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