# Enrolled Agent Exam [Part 2] 54, Lower of Cost or Market (LCM)

Page: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-54-lower-of-cost-or-market-lcm
Text version: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-54-lower-of-cost-or-market-lcm.md
Podcast: [Finance Exam Prep](https://stenobird.com/podcast/finance-exam-prep-7658413)
Published: 2026-06-20T22:41:20+00:00
Episode link: https://open-exam-prep.com/
Audio file: https://episodes.captivate.fm/episode/057ff188-618d-47a1-aba4-ac739b654e66.mp3
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Duration seconds: 137

## Resource

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The Lower of Cost or Market (LCM) method requires inventory to be valued at the lesser of its historical cost or current market value. - For tax purposes, "market" is typically the current replacement cost of the inventory. - The LCM method cannot be used if the taxpayer uses the LIFO inventory method. - A write-down from cost to a lower market value results in a recognized loss in the current period. - The exam will likely test your ability to apply the LCM rule on an item-by-item basis to calculate the correct inventory valuation. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

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## Transcript

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