Thank you ! The original cost of an item of inventory is above its replacement cost....

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The original cost of an item of inventory is above its replacement cost. The items replacement cost is below its net realiza

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business accounting

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Answer 1

Answer #1

Solution:

Under the lower of cost or market method, the inventory item should be valued at "Replacement cost".

This is because replacement cost is less than net realizable value and it is higher than net realizable value minus a normal profit.

Hence, third option "Replacement cost" is correct answer.

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Answer 2

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