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What is LCNRV: Inventory Write-Down Guide about?

Lower of cost or net realizable value (LCNRV) is applied to inventories on an item-by-item basis, except for raw materials and factory supplies. If the related finished goods need to be written down, raw materials and factory supplies will be tested for write-down. There are two methods for accounting for inventory write-downs: the direct method, where losses are buried in cost of goods sold, and the allowance method, where a loss account tracks write-downs that offset an allowance valuation account.

Author

Zee

Language

EN