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The lower-of-cost-or-market (LCM) approach was developed to avoid reporting inventoryatan amount greater than the benefits it can provide. The LCM approach records losses in the

The lower-of-cost-or-market (LCM) approach was developed to avoid reporting inventoryatan amount greater than the benefits it can provide. The LCM approach records losses in the period the value of the inventory drops below its cost instead of later in the period that the goods are ultimately sold. Is this a conservative or an aggressive approach? What does GAAP say about LCM?

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