On December 31, 2000, the aggregate replacement cost of all of ExxonMobil’s crude oil and natural gas inventory was approximately $13.9 billion. By December 31, 2001, the aggregate replacement cost of ExxonMobil’s inventory had fallen to $10.9 billion. This reduction in replacement cost was primarily the result of a decline in the price of crude oil. The average crude oil sales price per barrel was $21.10 in 2001, compared to $25.59 in 2000. In spite of this $3.0 billion decline in the replacement cost of inventory, ExxonMobil was not required to make a lower-of-cost-or-market adjustment in 2001. Instructions: Explain why you think this is so.