Lower of Cost or Market
/ˈloʊər ʌv kɔst ɔr ˈmɑrkɪt/
Definitions
- (n.) An accounting rule requiring inventory to be valued at the lower of its original cost or its current market value to prevent overstatement of assets.
The company adjusted its balance sheet by applying the lower of cost or market rule to avoid overstating inventory value.
Forms
- lower of cost or market
Related terms
See also
Commentary
Used primarily in inventory accounting to comply with conservatism principle; drafters should specify the applicable measure of market value to avoid ambiguity.
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