The lower of cost and net realizable value is a valuation method departing from the cost principle.

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The lower of cost and net realizable value method departs from the cost principle, which states that assets should be recorded at their historical cost. This method takes into account the possibility of a decline in the value of assets, and requires that assets be written down to their lower of cost or net realizable value. This departure from the cost principle is necessary to ensure that financial statements provide a true and fair view of the company's financial position.

The Lower of Cost and Net Realizable Value Is a Valuation