What is net realizable value?
With regards to inventory, net realizable value (NRV) is the estimated selling price in the ordinary course of business minus any cost to complete and to sell the goods. NRV is one of the amounts considered when determining the lower of cost or market for items in inventory.
Net realizable value is also associated with accounts receivable. In this situation, NRV is the amount of accounts receivable that is expected to turn to cash. Net realizable value sometimes refers to the balance in the general ledger account Accounts Receivable minus the balance in the account Allowance for Doubtful Accounts (or Allowance for Uncollectible Accounts.)
Learn more about Lower of Cost or Market.
About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.
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I need to know how to find the net realizable value of the recievables given this information:
Amounts estimated to be uncollectible 180,000
Accounts receivable 1,750,000
Allowance for doubtful accounts 125,000
I would think it is: 1,750,000- (higher of 180,000 and 125,000)
How do I find the net realizable value of inventory? For example Part No. 110, Quantity at hand 600, Cost per unit, $ 90.00, Cost to replace $ 100.
NRV is accounts receivable minus allowance for doubtful accounts. So 1750000-125000=1625000
This is a lovely site. Look forward to visiting it more often to furnish my accounting knowledge.
what the diffrent between net realizable value and replacement value?
I need the explantion for the definition of NRV to have a clear concept ?
1625,000