In the lower of cost or market determination,the ceiling is the inventory's net realizable value.

In the lower of cost or market determination, the ceiling is the inventory's net realizable value, which is the estimated selling price in the ordinary course of business, minus the estimated costs necessary to complete the sale. This means that the inventory cannot be valued at an amount higher than its net realizable value, as it would result in overvaluing the inventory and potentially misstating the financial statements.