When applying the lower-of-cost-or-net-realizable-value rules to ending inventory valuation, net realizable value generally refers to the cost at which the company could sell a unit of inventory.

Question

Quizplus · Accepted Answer

Net realizable value refers to the estimated selling price minus any costs associated with selling the inventory, such as disposal costs or transportation costs. It is not necessarily the same as the cost at which the company could sell a unit of inventory.

When Applying the Lower-Of-Cost-Or-Net-Realizable-Value Rules to Ending Inventory Valuation, Net