King Camera Shop Applies the Lower-Of-Cost-Or-Market Rule to Individual Items

question 73

Essay

King Camera Shop applies the lower-of-cost-or-market rule to individual items of inventory. In 2013, some of King's inventory lost value due to obsolescence. Other items increased in market value. In total, the market value of King's inventory was higher at the end of 2013 than the cost of the inventory. Would King have an adjustment to make at the end of 2013 due to the lower-of-cost-or-market rule? Would the answer be any different if King applied the rule in aggregate rather than to individual items?

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Definitions:

Real Number Line

A line that graphically represents all real numbers, including integers, fractions, and irrational numbers.

Real Number

Any number that can be found on the number line including both rational and irrational numbers.

Opposite Number

The number that, when added to a given number, results in zero; also known as the additive inverse.

Real Number Line

A line that graphically represents the set of all real numbers in a continuous manner, where each point on the line corresponds to a real number.