NRV for an item with estimated selling price 120, costs to complete 15, costs to sell 5 equals what?

NRV for an item with estimated selling price 120, costs to complete 15, costs to sell 5 equals what?

• A. 95
• B. 120
• C. 110
• D. 100

Answer: (A)

Net realisable value is the estimated selling price in the normal course of business minus the costs needed to complete the item and to sell it. Here, the selling price is 120, costs to complete are 15, and costs to sell are 5. NRV = 120 − 15 − 5 = 100. This figure is used to determine asset value under inventory accounting, ensuring you don’t overstate value by ignoring the costs required to finish and sell.

Net realisable value is the estimated selling price in the normal course of business minus the costs needed to complete the item and to sell it. Here, the selling price is 120, costs to complete are 15, and costs to sell are 5. NRV = 120 − 15 − 5 = 100. This figure is used to determine asset value under inventory accounting, ensuring you don’t overstate value by ignoring the costs required to finish and sell.