O $2]$ The lower$-$of$-$cost$-$or$-$market rule requires a company to

use the LIFO method in times of rising prices

$q,$

$$ adjust the inventory balance downward if its replacement cost is lower than its historical cost

$$ use this method if its inventory has been destroyed or lost

$$ adjust the cost of goods sold downward if the inventory's replacement cost is lower than its historical cost.