Following is information regarding the year-end inventory of Bastion County Steelworks. Required: (a) Apply the lower-of-cost-or-market (LCM)

Question:

Following is information regarding the year-end inventory of Bastion County Steelworks.

Required:
(a) Apply the lower-of-cost-or-market (LCM) rule to Bastion County€™s ending inventory, assuming that the company applies the rule on.
(1) An item-by-item basis.
(2) A total inventory basis.
(b) What accounting concept or concepts dictate that businesses apply the LCM rule? Does this rule seem reasonable to you? Why or why not?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...