Lower of Cost

Lower of Cost

About Lower of Cost:

Lower of Cost or Market is a conservative inventory method that reflects losses in market values but not gains. An asset is recorded at its historical cost, but the amount is written down to the asset's market value if this becomes lower than the original cost. This method cannot be used with the last in, first out approach. When the lower of cost or market method is used, each item included in the inventory must be valued at whichever is lower, its cost or its market value. Former Tax Regulation (check if this Reg. is current here) §1.471-4(c).

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