urrent Attempt in Progress When the cost-of-goods-sold method is used to reduce the cost of inventory to its net realizable value, the net realizable value figure for ending inventory is substituted for cost and the loss increases Cost of Goods Sold. there is a direct reduction in the selling price of the product that results in a loss being reported on the income statement before the sale. only the portion of the loss attributable to inventory sold during the period is reported in the financial statements. a loss is recorded directly in the inventory account by crediting Inventory and debiting Inventory Loss. Attempts: 0 of 1 used