{"id":5184,"date":"2014-12-10T15:24:04","date_gmt":"2014-12-10T13:24:04","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=5184"},"modified":"2014-12-07T15:25:05","modified_gmt":"2014-12-07T13:25:05","slug":"measuring-net-realisable-value-for-inventories","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/measuring-net-realisable-value-for-inventories\/","title":{"rendered":"Measuring net realisable value for inventories"},"content":{"rendered":"<p>As was defined before, the net realisable value is essentially an amount your company expects to realise from the sale of an inventory item in the ordinary course of business. First and foremost it should be noted that any\u00a0<strong>rapid sales or forced sales<\/strong>\u00a0(i.e. if the goods are seld to meet a warranted liability)\u00a0<strong>are not defined as \u2018ordinary course of business\u2019 and prices determined under such conditions are normally not compared against cost of items of inventory<\/strong>.\u00a0<!--more--><\/p>\n<p>How you would measure net realisable value for inventories is by taking either sales that happened during your own business (i.e. answering the question of \u201cfor which amount we have sold those items before\u201d) \u2013 if those selling prices are still valid (that is you don\u2019t expect to be selling lower than that and haven\u2019t done so before); you would take selling prices of similar assets from sources available (i.e. market analysis, statistics about available indexes, etc.); you would estimate the selling price from offers you\u2019ve received for the item.<\/p>\n<p>Should any of the indications to your estimates result in selling price that\u2019s lower as compared to the cost price, you ought to consider if there\u2019s reason to say that the net realisable value is lower than cost and recognize a provision within your accounts. It\u2019s important to understand also the purpose of the inventory itself prior to recognizing any write-downs. For instance, if the inventory is held to satisfy an agreement, the NRV of the inventory is the selling price given within the agreement they are held for.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As was defined before, the net realisable value is essentially an amount your company expects to realise from the sale of an inventory item in the ordinary course of business. First and foremost it should be noted that any\u00a0rapid sales or forced sales\u00a0(i.e. if the goods are seld to meet a warranted liability)\u00a0are not defined [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-5184","post","type-post","status-publish","format-standard","hentry","category-1-3-inventory"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=5184"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5184\/revisions"}],"predecessor-version":[{"id":5185,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5184\/revisions\/5185"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=5184"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=5184"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=5184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}