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Discuss the lower of cost or market (LCM) in relationship with usefulness of accounting information

Discuss the lower of cost or market (LCM) in relationship with usefulness of accounting information

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Lower of cost or market is the method of valuation of the inventory for the organisation. in the lower of cost or market as the name represents that the inventory is valued at the lower of cost or market value.

cost is refer to the cost of invnetory and the market cost refer to the replacement cost of inventory.

the market value of inventory can not be exceed the net realizable value or be lower than the net realizable value minus the normal profit margin.

net realizable value is detetmined as the estimated selling price, minus estimated cost of completion and dispoal of goods.

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