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are not overstated (under ASPE, companies record the lower of cost and market value). For example, under IFRS, at a company's year end, if an unfinished good that already cost $ 25 is expected to sell for $ 100 to a customer, but it will take an additional $ 20 to complete and $ 10 to advertise to
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of the inventory goods less the selling costs (completion and disposal). Therefore, it is expected sales price less selling costs (e.g. repair and disposal costs). NRV prevents overstating or understating of an assets value. NRV is the price cap when using the Lower of Cost or Market Rule.
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is done, and hence a decrease of $ 5 in this year's income statement. In the next year's income statement after the good was sold, this company will record a revenue of $ 100, Cost of Goods Sold of $ 20, and Cost of
Completion and Disposal of
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419:. In this year's income statement, since the NRV ($ 20) is less than the cost of the good ($ 25), the NRV will get recorded as the Cost of Ending Inventory. To do so, an inventory
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141:(IFRS) that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. Net realizable value is generally equal to the selling
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Suppose we changed the example so that it costs $ 60 to advertise to the customer. Now the good's NRV will be
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Selling
Expenses (completion expenses and advertising expenses)
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Inventory can be valued at either its historical cost or its
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Profit (Selling Price − Initial Cost − Selling
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Under IFRS, companies need to record the cost of their
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United States
Generally Accepted Accounting Principles
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157:and NRV, to ensure that their inventory and
139:International Financial Reporting Standards
121:(NRV) is a measure of a fixed or current
106:Learn how and when to remove this message
412:{\displaystyle \$ 100-\$ 20-\$ 60=\$ 20}
308:{\displaystyle \$ 100-\$ 25-\$ 30=\$ 45}
205:{\displaystyle \$ 100-\$ 20-\$ 10=\$ 70}
135:Generally Accepted Accounting Principles
593:NRV (Selling Price − Selling Expenses)
549:{\displaystyle \$ 100-\$ 20-\$ 80=\$ 0}
352:NRV (Selling Price - Selling Expenses)
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499:{\displaystyle \$ 20+\$ 60=\$ 80}
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457:{\displaystyle \$ 25-\$ 20=\$ 5}
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51:Find sources:
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29:This article
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612:market value
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96:January 2017
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38:Please help
33:verification
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137:(GAAP) and
618:References
421:write down
216:of $ 100,
131:accounting
66:newspapers
541:$
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127:inventory
671:Category
214:revenue
80:scholar
263:profit
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562:IFRS
556:).
321:IFRS
143:price
123:asset
87:JSTOR
73:books
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155:cost
59:news
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42:by
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36:.
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