How Do You Take Inventory Using The Lower Of Cost Or Market Method?
As consumers compare prices in the store for the best deal, and companies do the same with goods and services. There is a constant battle to find the best price for the best quality product. Specifically, inventory that has large price fluctuations may be reviewed periodically to determine the best possible method for valuing inventory. Take the following steps in using the lower of cost or market value with inventory. Determine the cost of inventory using the current method. Before determining which method works best for an organization, the total inventory costs must be figured. Hopefully, this will be just a matter of running an accounts payable report for all goods purchased during a specific period. Compare costs to the current market value of the inventory. This may be as simple as contacting two to three vendors and getting the current value of the supply. Apply the market price to the total quantity of inventory on hand. Use the lower of cost or market value for inventory to re
