US GAAP ASC 330-10

Lower of Cost or Net Realizable Value (LCNRV)

Rule requiring inventory to be written down if market realizable value falls below cost.

Detailed Definition & General Ledger Context

Lower of Cost or Net Realizable Value (LCNRV) is governed by US GAAP ASC 330-10 in general ledger financial reporting and fixed asset sub-ledgers. Maintaining accurate records of Lower of Cost or Net Realizable Value (LCNRV) is vital for audit compliance, asset balance verification, and tax schedule reconciliation.

Mathematical Standard & Equation

            Inventory Carrying Value = Min ( Historical Cost, Net Realizable Value )
          

General Ledger Journal Entry Standard

            Debit: Inventory Expense Account

            Credit: Inventory Contra-Asset / Payable Liability

Common Operational Pitfalls

Failing to reconcile fixed asset sub-ledgers with the general ledger trial balance monthly.
Conflating IRS MACRS tax depreciation tables with GAAP straight-line financial reporting.
Misclassifying lease obligations under ASC 842 capitalization standards.

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Authoritative Source

Source: https://www.fasb.org/ ↗