what is the lower of cost or market lcm method 
the lower of cost or market lcm method states that when valuing a company s inventory it is recorded on the balance sheet at either the historical cost or the market value historical cost refers to the cost at which the inventory was purchased the value of a good can shift over time this holds significance because if the price at which the inventory can be sold falls below the net realizable value nrv of the item thus triggering a loss for the company then the lower of cost or market method can be employed to record the loss 