What does net realizable value mean on the CPA exam?
Net realizable value. Estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory on FIFO or average cost is carried at the lower of cost and this. LIFO and retail still use lower of cost or market.
Defined against ASC 330-10-20, 35-1B, 35-1C.
Which CPA exam sections use net realizable value?
Net realizable value appears in the FAR section of the CPA exam.
Other terms defined against ASC 330-10
- cost of goods sold: What the items actually sold cost to make or buy.
Other names for net realizable value
NRV
Related terms
- fair market value: The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion and both reasonably informed.
- acquisition-date fair value: What something was worth on the day control changed hands.
- held for sale: A classification for a component the entity is actively marketing and expects to sell within a year.
- present value: What a future amount is worth today, once a discount rate has been applied for the waiting.
- California Consumer Privacy Act: California's consumer privacy statute, as amended by the CPRA.
- capital asset: For tax, almost everything a taxpayer owns EXCEPT inventory, receivables, and depreciable or real property used in a trade or business.