In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

Question

Quizplus · Accepted Answer

Net realizable value is the estimated selling price minus any costs of disposal or completion, such as repair or marking down the price. This is used to determine the value of inventory for financial reporting purposes. Therefore, damaged merchandise should be valued at its estimated selling price, minus any direct costs of disposal, such as shipping or advertising expenses.

In Valuing Damaged Merchandise for Inventory Purposes, Net Realizable Value