Inventory must not be carried above recoverable amounts. IFRS uses lower of cost and net realizable value (NRV). US GAAP traditional lower of cost or market (LCM) applies replacement cost bounded by a ceiling and floor. Select your standard, enter the relevant inputs, and quantify any write-down. This calculator is for planning and education — not official reporting advice.
How to use this calculator
- Select IFRS or US GAAP.
- IFRS: enter inventory cost and net realizable value.
- US GAAP: enter inventory cost, replacement cost, ceiling (typically NRV), and floor (NRV less normal profit).
- Review carrying value, write-down, and financial statement impact.
Formula
IFRS: LCNRV value = min(cost, NRV); write-down = max(0, cost − NRV). US GAAP: market = min(ceiling, max(replacement cost, floor)); LCM value = min(cost, market); write-down = max(0, cost − LCM value).
Example
IFRS: inventory costing $10,000 with NRV $8,500 is written down to $8,500 ($1,500 write-down). US GAAP: cost $10,000, replacement $8,000, ceiling $9,000, floor $7,000 yields market $8,000 and a $2,000 write-down.
Frequently asked questions
What is the difference between IFRS and US GAAP here?
IFRS compares cost directly to net realizable value. US GAAP traditional LCM derives market from replacement cost with ceiling and floor constraints before comparing to cost.
What is the ceiling in US GAAP LCM?
Typically net realizable value (estimated selling price less costs to complete and sell). It caps market so inventory is not valued above amounts expected from sale.
What is the floor in US GAAP LCM?
NRV minus an allowance for normal profit margin. Market is not reduced below the floor under traditional LCM mechanics.
Can write-downs be reversed?
Under IFRS, some inventory write-down reversals are permitted when conditions improve. U.S. GAAP generally prohibits reversing inventory write-downs. Confirm your framework.