Ex 2 Lower of Cost or Market (LCM) Steps: 1. Find market price (which is the middle amount of, replacement cost, ceiling or floor) 2. Compare market with cost and use the lower of the two. 3. Adjust ending inventory on the books if necessary. Example Item Cost RC NRVceiling) Floor New Iny cost Adiustment 20 34 3230 32 46 42 36 52 4262 50 38 3268