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in this video weamp;#39;re going to discuss the lower of cost or net realizable value rule so this has to do with inventory and generally we put inventory on the balance sheet at cost so if you pay 80 for some inventory letamp;#39;s say youamp;#39;re a retailer itamp;#39;s going to go on your balance sheet at dollars unless at some point in the future we see that oh the net realizable value of that inventory is lower than the cost itamp;#39;s lower than eighty dollars letamp;#39;s say the net realizable value is 65. then we say okay now the net realizable value is lower than the cost of the inventory we need to decrease the inventory value on the balance sheet by taking a write down of 15 so that the inventory now appears on the balance sheet at 65 dollars so that is the lower cost or net realizable value rule the inventory will appear on the balance sheet at the lower of the cost or its net realizable value now you might be wondering what is net realizable value thatamp;#39;s j