PRACTICE TOPIC
Net Realizable Value
Practice Net Realizable Value with 3 accounting challenges on Accountely — instant IAS/IFRS-compliant scored feedback on every submission.
What net realizable value covers
Net realisable value is the estimated selling price in the ordinary course of business, less the costs still to be incurred to complete and sell the item. It sets the ceiling on what inventory can be carried at, and comparing it with cost is what triggers a write-down.
Challenges here ask you to compute net realisable value, compare it with cost, and post any write-down required.
Where marks are usually lost
- Using selling price without deducting the costs to complete and sell.
- Comparing cost and net realisable value in total rather than item by item where that is required.
- Writing an item up above its original cost on a later recovery.
3 Net Realizable Value practice challenges
TitleTypeDifficulty
Harvest Lane Foods - LCNRV by Item: Write-down and Reversal (IAS 2) JournalmediumGlenmore Stores - Inventory at the Lower of Cost and Net Realizable Value JournalmediumAshford Retail plc - Classified Statement of Financial Position with Inventory at Net Realizable Value Balance Sheethard