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We can modify our retail method calculations to incorporate the lower of cost or market (LCM) rule
We can modify our retail method calculations to incorporate the lower of cost or market (LCM) rule
The lower of cost or market (LCM) rule says that inventory must be written down to market if market is lower than inventory's cost. We can incorporate this requirement by modifying our previous calculations.
New calculation that incorporates LCM rule
New calculation that incorporates LCM rule
This is called the "conventional retail method" and the logic for using this approximation is that a markdown is evidence of a reduction in the utility of inventory.
The LIFO retail method
The LIFO retail method
Other issues pertaining to the retail method
Other issues pertaining to the retail method
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