How is the lower-of-cost-or-market rule applied to each individual inventory item?
What will be an ideal response?
When the lower-of-cost-or-market rule is applied to each individual inventory item, the accountant looks at each line item in the inventory and determines whether the original cost is more or less than the current market value. The lower of the two figures is then multiplied by the number of units. After performing this step for each line item in the inventory, the total of the resultant figures will be the valuation of the inventory. Each item is thus valued at the lower of cost or market.
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Indicate whether the statement is true or false