CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

An item of inventory with an invoice price of $80, on which 50% is added as markup, has a current replacement cost of $82. Under LCM, which amount should be used to determine the value of this item of inventory?
A. $123
B. $80
C. $82
Explanation: Under LCM, the lower of cost or market is used. In this case, cost ($80) is lower than market ($82).

User Contributed Comments 3

User Comment
murli Invoice price = acquisition price!
Pooh if the mv is higher than cost, nothing is done, unless when the inventory is sold.
teje if MV is lower than cost, than need to calculate what (market price - selling cost) - normal profit realizable and see if the market price is below this or above. If above than use market, if below use the value obtained from the above formula.
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