Ch5. Video 18 - LCM example

This video tutorial explains the concept of Lower of Cost or Market (LCM) in inventory management. It provides a detailed example using Foxtrot company to demonstrate how to calculate total invoice and market costs, determine the LCM, and make necessary adjustments. The tutorial covers both individual inventory and inventory as a whole, highlighting the differences in approach and the importance of accurate calculations for financial reporting.

What journal entry is required when adjusting inventory to reflect the LCM?

What does it mean if the LCM write down is a negative number?

In what scenario would you not need to make a journal entry for LCM adjustments?

How does the calculation of LCM differ when considering individual inventory versus total inventory?