With regards to inventory, net realizable value (NRV) is the estimated selling price in the ordinary course of business minus any cost to complete and to sell the goods. NRV is one of the amounts considered when determining the lower of cost or market for items in inventory.

Net realizable value is also associated with accounts receivable. In this situation, NRV is the amount of accounts receivable that is expected to turn to cash. Net realizable value sometimes refers to the balance in the general ledger account Accounts Receivable minus the balance in the account Allowance for Doubtful Accounts (or Allowance for Uncollectible Accounts.)

To learn more, see the Related Topics listed below: