Lower of Cost and Market Method

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Dictionary Says

Definition of 'Lower of Cost and Market Method'

A requirement of GAAP in the United States that inventory be recorded at the lower of either the cost to produce it, the cost to repurchase it or the market value of the inventory.
Investopedia Says

Investopedia explains 'Lower of Cost and Market Method'

The lower of cost and market method has two boundaries on the valuation of inventories. The first is the inventory ceiling, which requires that inventory must be reported no higher than the net realizable value less expenses. The second boundary is the inventory floor, which requires that inventory value be reported at no lower than the net realizable value plus normally attainable profit.
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'Lower of Cost and Market Method'

  • What are the generally accepted accounting principles for ...

    http://www.investopedia.com/ask/answers/05/070105.asp
    ... inventory. This is known as the lower of cost and market value method of inventory
    valuation. The upper boundary is called the ceiling. ...

  • CFA Level 1 Study Guide - Assets - Inventory Valuation ...

    http://www.investopedia.com/exam-guide/cfa-level-1/assets/inventory-valuation.asp
    ... of Capital; 11.9 Factors Affecting the Cost of Capital; ... 12.14 Market Anomalies; 12.15
    Implications of Efficient Markets. ... Put-Call Parity and the Lower Bounds; 15.36 ...

  • Inventory Valuation For Investors: FIFO And LIFO

    http://www.investopedia.com/articles/02/060502.asp
    ... Conclusion Many companies will also state that they use the "lower of cost or market."
    This means that if inventory values were to plummet, their ...

  • Mark-To-Market Mayhem

    http://www.investopedia.com/articles/financial-theory/08/mark-to-market-mayhem.asp
    ... As you might imagine, this method can have serious repercussions in a bear market,
    leading to much ... Before MTM, there was lower cost or market accounting (LCM ...

  • CFA Level 1 Study Guide - Assets - Basics of Inventories ...

    http://www.investopedia.com/exam-guide/cfa-level-1/assets/basics-inventories.asp
    ... of Capital; 11.9 Factors Affecting the Cost of Capital; ... 12.14 Market Anomalies; 12.15
    Implications of Efficient Markets. ... Put-Call Parity and the Lower Bounds; 15.36 ...

  • CFA Level 1 Study Guide - Microeconomics - Market Efficiency ...

    http://www.investopedia.com/exam-guide/cfa-level-1/microeconomics/market-efficiency.asp
    ... of Capital; 11.9 Factors Affecting the Cost of Capital; ... 12.14 Market Anomalies; 12.15
    Implications of Efficient Markets. ... Put-Call Parity and the Lower Bounds; 15.36 ...

  • CFA Level 1 Study Guide - Assets - Causes a Decline in LIFO ...

    http://www.investopedia.com/exam-guide/cfa-level-1/assets/causes-decline-lifo-reserve.asp
    ... of Capital; 11.9 Factors Affecting the Cost of Capital; ... 12.14 Market Anomalies; 12.15
    Implications of Efficient Markets. ... Put-Call Parity and the Lower Bounds; 15.36 ...

  • CFA Level 1 Study Guide - Corporate Finance - Factors Affecting ...

    http://www.investopedia.com/exam-guide/cfa-level-1/corporate-finance/factors-affecting-cost-of-capital.asp
    ... of Capital; 11.9 Factors Affecting the Cost of Capital; ... 12.14 Market Anomalies; 12.15
    Implications of Efficient Markets. ... Put-Call Parity and the Lower Bounds; 15.36 ...

  • CFA Level 1 Study Guide - Microeconomics - Marginal and Average ...

    http://www.investopedia.com/exam-guide/cfa-level-1/microeconomics/marginal-average-total-cost-curve.asp
    ... of Capital; 11.9 Factors Affecting the Cost of Capital; ... 12.14 Market Anomalies; 12.15
    Implications of Efficient Markets. ... Put-Call Parity and the Lower Bounds; 15.36 ...

  • Riding The Bear Into A Bull Market

    http://www.investopedia.com/articles/stocks/09/bear-into-bull-market.asp
    ... Read more in Stashing Your Cash: Mattress Or Market?) Easing Back In Dollar-cost
    averaging, an ... prices are higher and more shares when prices are lower. ...

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