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INVENTORIES, NET

12 Months Ended

Dec. 31, 2021

Inventories are stated at the lower of cost or estimated realizable value. Cost is primarily determined based on the first-in, first-out inventory method ("FIFO") or average cost methods, which approximates current replacement cost. However, certain Carrier entities use the last-in, first-out inventory method ("LIFO").

Inventories, net consisted of the following:


(In millions)	2021		2020
Raw materials	$	559	$	363
Work-in-process	197		143
Finished goods	1,214		1,123

Inventories, net	$	1,970	$	1,629

The Company performs periodic assessments utilizing customer demand, production requirements and historical usage rates to determine the existence of excess and obsolete inventory and records necessary provisions to reduce such inventories to estimated realizable value. Raw materials, work-in-process and finished goods are net of valuation reserves of $154 million and $183 million as of December 31, 2021 and 2020, respectively.

Certain entities use LIFO to determine the cost of inventory. If inventories that were valued using the LIFO method had been valued under the FIFO method, the net book value of the inventories would have been higher by $141 million and $118 million as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, approximately 31% and 33%, respectively, of all inventory utilized the LIFO method.