Richmond Sporting Goods uses the FIFO inventory method and values its inventory using the lower of cost or net realizable value (LCNRV) rule. Richmond Sporting Goods has the following account balances at May 31, 2014, prior to releasing the financial statements for the year:

The accountant for Richmond Sporting Goods has determined that the replacement cost (current market value) of the ending inventory as of May 31, 2014, is $54,000.
Requirements
1. Which accounting principle or concept is most relevant to Richmond Sporting Goods€™ decision to utilize LCNRV?
2. What value would Richmond Sporting Goods report on the balance sheet at May 31, 2014, for inventory?
3. Prepare any adjusting journal entry required from the information given.

Inventory Cost of Goods Sold Sales Revenue Beg Bal 41,800 End Bal 68,900 Bal 206,000 Ba 303,000