뒤로Lower of Cost or Market definitions
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1/15뒤로Skip to main content뒤로Rule of Conservatism
Accounting guideline prioritizing immediate recognition of losses over gains to ensure cautious financial reporting. Historical Cost
Original amount paid for an asset, used as the basis for valuing inventory unless a decline in value occurs. Lower of Cost or Market Rule
Inventory valuation method requiring reporting at the lesser of original cost or current market value. Inventory Valuation
Process of determining the monetary value of goods held for sale, influenced by cost and market considerations. Market Value
Current worth of inventory, determined by either net realizable value or replacement cost. Net Realizable Value
Estimated selling price of inventory minus any costs necessary to complete and sell the item. Replacement Cost
Amount required to acquire identical inventory in the current market. Disposal Cost
Expenses incurred to sell inventory, such as commissions or other selling-related outlays. Write-Down
Reduction in the book value of inventory to reflect a decrease in market value below historical cost. Loss from Write-Down of Inventory
Expense recognized when inventory value is reduced to market, representing the difference between cost and lower market value. Journal Entry
Formal accounting record documenting the debit and credit effects of a transaction, such as inventory write-downs. Debit
Accounting entry increasing assets or expenses, or decreasing liabilities or equity, used here to record losses. Credit
Accounting entry decreasing assets or expenses, or increasing liabilities or equity, used here to reduce inventory value. Estimated Selling Price
Projected amount for which inventory can be sold before deducting any selling costs. Financial Statements
Formal reports presenting a company's financial position, including inventory values adjusted under the lower of cost or market rule.
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