Question

When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"? Discounted present value. Net realizable value. Net realizable value less a normal profit margin. Replacement cost, Net realizable value, or Net realizable value less a normal profit margin.

Answer 1

Replacement Cost

Step-by-step explanation:

Replacement cost can be described as to the amount of money a business must currently spend to replace an essential asset like a real estate property, an investment security, a lien, or another item, with one of the same or higher value.

In other words, replacement cost definition is the current market price a company would have to pay to replace an existing asset.