Lower of Cost or Market Rule for Valuing Inventory

This video shows how to apply the lower-of-cost-or-market rule to value inventory. A comprehensive example is presented to illustrate how the original cost of the inventory is compared to its "market" value (the middle value of replacement cost, net realizable value, and net realizable value minus the normal profit) to determine whether an inventory writedown is necessary. The video then demonstrates how to record the appropriate writedown with a journal entry.

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