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olasank [31]
3 years ago
10

What is the rationale behind the ceiling when applying the lower-of-cost-or-market method to inventory?

Business
1 answer:
Taya2010 [7]3 years ago
5 0

Answer:

The correct answer is letter "D": Prevents overstatement of the value of obsolete or damaged inventories.

Explanation:

The lower-of-cost-or-market method values assets according to the lowest value possible choosing between the market value or the asset's historical cost. This accounting principle is useful to avoid exaggerating the value of obsolete or damaged assets the firm might have in stock.

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