INVENTORY AND INVENTORY VALUATION

12 Months Ended

Dec. 31, 2023

Inventory is stated at the LCNRV and consists of raw materials, work in progress, finished goods, and service parts. The Company primarily calculates inventory value using standard cost, which approximates actual cost on the first-in, first-out (“FIFO”) basis. NRV is the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion. The Company assesses the valuation of inventory and periodically adjusts its value for estimated excess and obsolete inventory based upon expectations of future demand and market conditions, as well as damaged or otherwise impaired goods. The following table summarizes the components of “Inventory” on the Consolidated Balance Sheets (in millions):


	December 31, 2022		December 31, 2023
Raw materials and work in progress	$	949	$	1,584
Finished goods	399		1,036
Total inventory	$	1,348	$	2,620

The balance of the Company’s inventory was written down by $582 million and $319 million from its cost to its NRV as of December 31, 2022 and 2023, respectively. Additionally, the Company has a liability for LCNRV losses related to firm purchase commitments which were $338 million and $126 million as of December 31, 2022 and 2023, respectively, and are reflected in the “Inventory” component of “Accrued liabilities” on the Consolidated Balance Sheets. Refer to Note 9 "Accrued Liabilities" for more information about Accrued liabilities.

The impact of inventory LCNRV write-downs and the change in liability for LCNRV losses on firm purchase commitments was $95 million, $920 million, and $107 million during the years ended December 31, 2021, 2022, and 2023, respectively, and is recorded in “Cost of revenues” in the Company’s Consolidated Statements of Operations.