When Following U

Multiple Choice

When following U.S. GAAP, the lower-of-cost-or-market rule for inventory requires a firm to report ________.

A) the inventory at the higher amount of cost or market on the balance sheet
B) the difference between the cost basis and the market-based measure of inventory as a gain on the income statement
C) the inventory at cost if the market value of inventory is higher than its cost basis
D) the inventory at cost if the market value of inventory is lower than its cost basis