The U.S. GAAP lower of cost or market rule for inventories may be applied to total inventory, to groups of similar items, or to each item. Which application generally results in the lowest inventory amount?
Choice "B" is correct. Applying the lower of cost or market rule (item by item) separately to "each item" results in the lowest inventory amount. Choice "c" is incorrect. The three different applications generally result in different amounts. Choice "d" is incorrect. Extending to total inventory generally results highest ending inventory.Choice "a" is incorrect. Extending to groups of similar items generally results in a value in between "d" and "B".
