In applying the lower of cost or market method to inventory valuation market is defined as?

In the lower of cost or market method for inventory valuation, "market" is defined as the replacement cost of the inventory, but it cannot exceed the net realizable value (NRV) or be lower than the NRV less a normal profit margin. This approach ensures that inventory is valued conservatively, reflecting current market conditions. Essentially, market serves as a ceiling and a floor for valuing inventory, allowing for a more accurate representation of potential losses in value.