In a recent annual report, Kaiser Aluminum corporation made the following statement in reference to it's inventories: "The company recoded pretax charges of approximately $19.4 million because of a reduction in the carrying values of it's inventories caused principally by prevailing lower prices for alumina, primary aluminum, and fabricated products."

What basic accounting priciple caused Kaiser Aluminum to record this $19.4 million pretax charge? Briefely describe the rationale for this principle.