The LCNRV basis is an example of the accounting concept of conservatism.

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The LCNRV (Lower of Cost or Net Realizable Value) basis is an example of the accounting concept of conservatism. This concept requires a cautious approach to accounting and encourages the recognition of losses or expenses as soon as they are probable, but deferral of gains or revenues until they are certain. By valuing assets at the lower of their cost or net realizable value, the company is being conservative in its reporting and recognizing potential losses early on.

The LCNRV Basis Is an Example of the Accounting Concept