Net realisable value
Net realisable value is estimated selling price in the ordinary course of business less estimated completion and selling costs. Estimate the amount obtainable in an ordinary sale and subtract the remaining costs necessary to complete and sell the goods. If cost is 110 and NRV is 105, report inventory at 105 and recognise a 5 write-down. Reassess estimates at later reporting dates.
Worked example
Expected sale 120 less completion 10 and selling costs 5 gives NRV 105.
Common mistake
Compare NRV with cost; do not omit completion costs or substitute the selling price alone.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F1 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: NRV