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When applying the lower of cost or market rule to the valuation of inventory, the allowance method is considered preferable to the direct method because
When applying the lower of cost or market rule to the valuation of inventory, the allowance method is considered preferable to the direct method because the allowance method
a unlike the direct method, reduces the value of inventory reported on the balance sheet.
b reports the inventory loss or loss recovery in a separate income statement account.
c reports a higher inventory net valuation for balance sheet purposes than the direct method.
d reports smaller losses than the direct method.
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