An Adjustment to Ending Inventory Under the Lower of Cost

question 122

Multiple Choice

An adjustment to ending inventory under the lower of cost or market (LCM) rule would be least likely to be recorded by a company that sells:

• A) a household staple like laundry detergent.
• B) a fad product like Slap Wraps bracelets.
• C) seasonal items like snow blowers.
• D) high-tech goods like cell phones.

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Definitions:

Business Combination

A transaction or event in which an acquirer obtains control of one or more businesses.

Acquiring Companies

Companies that acquire control of other companies by buying a majority of their stocks or assets, effectively making them subsidiaries.

Issued Capital

The total value of a company’s shares that have been issued or sold to shareholders.

Net Assets

The total assets of a company minus its total liabilities, indicating the actual value of a company's equity.