Question

In applying LCM, market cannot be: 1-Less than net realizable value minus a normal profit margin. 2- Net realizable value less reasonable completation and disposal cost. 3- less than cost 4-greater than net realizable value reduced by an allowance for normal profit margin.

Answer 1

LCM : Lower of Cost or market Value , In this valuation method inventory can be valued at lower of market value or Cost value which ever is less.

So It means if the cost price is less than market value than cost price is taken as inventory value

Or if the market value is less than the cost value of inventory than market value is taken as inventory value.

So , As per the above given explanation, market cannot be Less than net realizable value minus a normal profit margin

So, Answer = Option 1 = Less than net realizable value minus a normal profit margin