In what circumstances do we use "Lower of Cost or Net Realizable Value" method of Inventory Valuation ?

When we are reporting closing inventory in the Financial statment then according to IAS2 inventory should be valued at lower of:

1. Cost

or 

2. Net realisable value. (NRV)

As per IAS2 Inventory should be valued at lower of cost or NRV while reporting

Agreed with the answers to colleagues