What is Net Realizable Value Or Cash Realizable Value - Definition - Meaning - Example - Calculations - Explanation
Net Realizable Value ( NRV ) Or Cash Realizable Value (CRV) is the amount of an Asset which is expected to be received or offered for sale when we valuate an asset. It is mostly used in case of Accounts Receivable and Inventory . We valuate an Accounts Receivable, when we deduct the Closing Balance of Allowance for Doubtful Accounts from it. The remaining amount is the amount which we are expected to be received from customers in the form of Cash . To Calculate NRV For Accou nts Receivable, the formula is given: NRV = E nding Balance of Accounts Receivable - Closing Balance of Allowance for Doubtful Accounts Or NRV = Gross Amount Of Accounts Receivable - Allowance For Doubtful Accounts In case of Inventory, it is the amount which is left after deducting the necessary costs incurred in bringing the inve ntory in saleable position from Selling Price (Market Value). Mathematically, we can write as shown below: NRV = Market Value - A ny...