How To Calculate Net Realizable Value Of Accounts Receivable - Formula - Example
How Is The Book Value Of Accounts Receivable Calculated? The Net Realizable Value or Cash Realizable Value of Accou nts Receivable can be calculated by deducted the ending balance of Allowance For Doubtful Accounts , that is a Contra Asset Account , from the closing Balance of Accounts Receivable to be shown on the Balance Sheet . It is the remaining amount that will be received in the form of Cash by company from customers in future after making estimation on the basis of Percentage of Sales (I n come Stateme n t-Approach) or the Perce n tage of Accou nts Receivables (Balance Sheet-Approach) . Formula For Net Realizable Value (NRV) Of Accou nts Receivable (A/R) NRV = Closi ng Accounts Receivable - Closing Balance of Allowance For Doubtful Accounts OR NRV = Gross Amount Of Accounts Receivable - Allowance For Doubtful Accounts For Example, if a company has Closing Accounts Receivable = Rs. 50000 and 5% Allowance For Doubtful Accounts on Net Sales = Rs. 7...