Question: In applying the lower-of-cost-or-market method to inventories, inventory values are written down when replacement cost falls. If the replacement cost then increases, inventory values are

“In applying the lower-of-cost-or-market method to inventories, inventory values are written down when replacement cost falls. If the replacement cost then increases, inventory values are written up, but not to an amount greater than the original cost.” Do you agree? Explain.

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