What Is the Rationale Behind the Ceiling When Applying the Lower-Of-Cost-Or-Market

Multiple Choice

What is the rationale behind the ceiling when applying the lower-of-cost-or-market method to inventory?

A) Prevents understatement of the inventory value.
B) Allows for a normal profit to be earned.
C) Allows for items to be valued at replacement cost.
D) Prevents overstatement of the value of obsolete or damaged inventories.