'Net realisable value' of inventories is defined as the net amount that an enterprise expects to realise from the sale of the inventories:
A) in the ordinary course of operations less estimated costs of completion and costs necessary to make the sale.
B) plus the estimated costs of completion plus the estimated costs necessary to make the sale.
C) in a forced sale.
D) plus the estimated costs of completion.

Question

Quizplus · Accepted Answer

Net realisable value is the expected selling price of the inventory in the ordinary course of business, less any costs associated with completing the inventory or making the sale. Option A reflects this definition. Option B adds the costs of completion, which is incorrect because NRV is the expected selling price less these costs. Option C refers to a forced sale, which would not reflect the normal selling price of the inventory in the ordinary course of business. Option D only adds the costs of completion, but does not subtract the estimated costs necessary to make the sale.

'Net Realisable Value' of Inventories Is Defined as the Net