In applying the lower of cost and net realizable value (NRV) to inventory valuation, NRV is defined as:
A) Historical cost.
B) Estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
C) Current sales price.
D) FIFO.
E) LIFO.

Question

Quizplus · Accepted Answer

Net realizable value is defined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. This means that it is based on future expectations and not historical cost, current sales price, or inventory costing methods such as FIFO or LIFO.

In Applying the Lower of Cost and Net Realizable Value