When the net realizable value (NRV) of inventory was lower than the cost at year-end, which of the following is 1. No adjustment is needed because inventory is valued at cost until it is sold. O2. Inventory balance is adjusted to NRV at year-end. O 3. No adjustment is needed because inventory is valued at NRV only when the cost is lower than NRV. 4. The company records a reserve for the decrease of value and writes it off when the item is sold.