ACC 557 DQ 2 Investment Valuation

" Please respond to the following:

While US GAAP requires assets to be valued at the lower of cost or market, there is a belief that assets with value fluctuations should be valued at market and adjusted on a regular basis. Create an argument supporting the use of market value for investment valuation. Provide support for your argument.

Assess the potential abuses of companies using a market value approach to investment valuation and how it may impact decisions made by the public relying on the information.

Answer:

GAAP requires that inventories be valued at lower of cost or market rule (LCM rule). Inventory cost is determined based on one of the cost flow assumptions discussed earlier. Market is defined as the current replacement cost, which is the...