Under the LCNRV basis in valuing inventory, inventory is valued at the lower of

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Under the LCNRV (lower of cost or net realizable value) basis, inventory is valued at the lower of its cost or net realizable value. Cost is the cost of producing or acquiring the inventory, and net realizable value is the estimated selling price in the ordinary course of business, less estimated selling expenses. This method is used to ensure that inventory is not carried on the balance sheet at a value higher than its realizable value.

Under the LCNRV Basis in Valuing Inventory, Inventory Is Valued