Under U.S. rules, once a company "writes down" an inventory item to a "market" value, it cannot later increase the carrying value of the inventory item.

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This is known as the "lower of cost or market" rule and is set by the Generally Accepted Accounting Principles (GAAP) in the United States. It ensures that companies do not overstate the value of their inventory by requiring them to write down the value to the lower of its original cost or its current market value. Once an inventory item has been written down, it cannot later be increased in value, as this would violate the rule.

Under US Rules, Once a Company "Writes Down" an Inventory Item