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Lower of Cost or Market Calculator for LIFO and Retail Method Inventory

What do the numbers come to once the work is shown?

Market as replacement cost between the NRV ceiling and the NRV-less-normal-profit floor, and the write-down.

  • Runs in your browser
  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Write-down
$8,000
Cost above market, all units
Inventory carrying amount
$42,000
Market per unit
$42
Drawn to one scale
Write-down$8,000
Inventory carrying amount$42,000
Market per unit$42
Ceiling (NRV) per unit$52
Floor (NRV less normal profit) per unit$40
All results
MeasureResult
Write-down$8,000
Inventory carrying amount$42,000
Market per unit$42
Ceiling (NRV) per unit$52
Floor (NRV less normal profit) per unit$40
How this was worked out
Work shownrecomputed as you type
NRV (ceiling) = selling price - costs to complete and sell
Floor = NRV - normal profit margin
Market = replacement cost, but not above the ceiling or below the floor
Carrying amount = min(cost, market)

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • NRV (ceiling) = selling price - costs to complete and sell
  • Floor = NRV - normal profit margin
  • Market = replacement cost, but not above the ceiling or below the floor
  • Carrying amount = min(cost, market)

How it works

ASU 2015-11 moved inventory measured on FIFO or average cost to the lower of cost and net realizable value. Inventory measured using LIFO or the retail inventory method stays on the lower of cost or market, where market is current replacement cost limited by a ceiling of net realizable value and a floor of net realizable value less a normal profit margin.

Inventory measured on FIFO or average cost uses the lower of cost and net realizable value test instead, with no ceiling or floor.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Why does LIFO keep the old test?

ASU 2015-11 left inventory measured using LIFO or the retail inventory method out of its scope, so the lower of cost or market test still applies to it.

Can the write-down reverse at year end?

No. Under ASC 330-10-35-14 the reduced amount is the new cost basis. Recoveries within the same fiscal year of losses recognized in an interim period follow ASC 270-10-45-6.

Item by item or by category?

Apply it by item, by category, or to the total, consistent with the approach that most clearly reflects income.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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