When Comparing the Lower of Cost to Market

question 83

Multiple Choice

When comparing the lower of cost to market

• A)the appropriate market value is determined before comparing it to the cost
• B)the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains
• C)the purpose of the floor is to prevent an excessive gain from being recognized in the future
• D)the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin

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Definitions:

Prior Interpretation

Definition pertains to the understanding or explanation of a legal document, statute, or principle that precedes the current analysis or consideration.

Plain Meaning

A principle of legal interpretation that dictates if the words of a statute are clear and unambiguous, they should be applied according to their ordinary meaning.

Legislative History

Legislative history refers to the documents and records leading up to the enactment of a law, including committee reports and debates, used to determine the legislature's intent.

Instrumentalist Attitude

An approach that views tools, systems, or policies strictly in terms of their utility and effective function.