allowance to reduce inventory to LCM

This is a valuation account for the asset Inventory. A credit balance should be reported in the allowance account for the amount that the market value of inventory is less than the cost reported in the Inventory account. The credit entered into the Allowance for Reduction of Cost to Market will mean a debit is entered into the income statement account Loss from Reducing Inventory to LCM. To learn more, see Explanation of Lower of Cost or Market.