Question

Q 6.31: High-technology and fashion are types of industries likely to frequently use A : the average cost basis. B : cost of goods sold. C : the lower-of-cost-or-net realizable value (LCNRV) basis. D : the historical cost basis.

Answer 1

Answer:

C : the lower-of-cost-or-net realizable value (LCNRV) basis.

Explanation:

High-technology and fashion are types of industries likely to frequently use ''the lower-of-cost-or-net realizable value (LCNRV) basis''. These types of industries having an inventory that has an uncertain future. Obsolescence, defects, oversupply, higher price declines, and similar obstacles can contribute to uncertainty about the realization of inventory items and hence accountants of these industries evaluate inventory and employ lower of cost or net realizable value considerations.