CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Inventory can be written down to the lower of cost or market value if its value declines due to ______.

I. obsolescence
II. price-level changes
III. damage
IV. any reason
A. I and II only
B. I and III only
C. All of the above
Explanation: The inventory should be written down to reflect the loss if its value declines below its original cost for whatever reason.

User Contributed Comments 3

User Comment
murli Not concerned about the cause of decline in value, principle is LCM!
Pooh LCM = lower cost or market
danlan Or when book value is not available, use condition: market below undiscounted future cash flow.
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