Which of the following regarding the lower of cost or market rule for inventory are true?
(1) The lower of cost or market rule is an example of the historical cost principle.
(2) When the replacement cost of inventory drops below the cost shown in the financial records, net income is reduced.
(3) When the replacement cost of inventory drops below the cost shown in the financial records, total assets are reduced.
a. (1)
b. (2)
c. (2) and (3)
d. All three
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