Lower of Cost or Market Rule
/ˈloʊər əv kɒst ɔːr ˈmɑrkɪt rul/
Definitions
- (n.) An accounting principle requiring inventory to be recorded at the lower value between its original cost and market replacement cost.
The company applied the lower of cost or market rule to write down obsolete inventory.
Forms
- lower of cost or market rule
- lower of cost or market rules
Related terms
See also
Commentary
This rule aims to prevent overstatement of inventory value, reflecting conservatism in financial reporting.
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