E6-9 Digital Camera Shop Inc
In this tutorial, we will look how to calculate the Lower‐of‐cost‐or‐market (LCM) for a camera shop. The main principle here is to take the lowest valuation from either book costs or actual market valuation, as this will provide the most conservative asset valuation.
- Student: Tyler Muffty
- Textbook: Principles of Accounting II
- Course: Accounting Week 3
E6-9 Digital Camera Shop Inc. uses the lower‐of‐cost‐or‐market basis for its inventory.
The following data are available at December 31.
|Cameras||Units||Cost per Unit||Market per Unit||Cost Total||Market Total|
How to Calculate LCM
For each row in the table, simply take the lowest amount from either “Cost Total” or “Market Total” from each row (just ignore the higher value), then and add them together. In this case, it would be solved by LCM = 790+1015+1368+1200.