valuation rule based on CONSERVATISM. Certain accounts are shown at the lower of their historical cost or current replacement cost reflecting an unrealized loss in the financial statements. In the opposite case (unrealized gain), no accounting recognition is given. For example, inventory is reflected at the lower of cost or market on an item-by-item, category, or total basis. In applying the rule, however, market cannot exceed the ceiling (net realizable value = selling price less costs to complete and dispose) nor can market be less than the floor (net realizable value less normal profit margin).