net realizable value

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Related to Realizable Values: Net Realizable Value

Net Realizable Value

The net asset value of an asset or investment if it were sold, less the estimated cost of the sale and the amount the seller would have to spend to bring the asset or investment to a state where it can be sold. The NRV is used in GAAP accounting rules to ensure that the value of an asset or investment is not overstated.

net realizable value

the amount for which a FIXED ASSET or CURRENT ASSET can be sold, less any selling expenses involved. Net realizable value of an asset may be below its Net Book Value in which case the ACCOUNTING PRINCIPLE of prudence would suggest that the value of the asset in the company's LEDGER accounts should be adjusted downward to avoid overstating asset values in the BALANCE SHEET.

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References in periodicals archive ?

Conventional accounting practice is to neglect discounting when estimating the net realizable value of current assets.

As with other asset classes, the existence of a ready market allows translation of realizable value in F into D at the current rate.

Most current assets are measured at realizable value with present value considerations neglected.

Translating inventory measured at realizable value at the current rate accurately represents the economic consequences to inventory, but reduces comparability between foreign inventory and domestic inventory measured on the conventional historical cost basis.

If economic conditions, except for inflation, are similar in the two countries, the book value of foreign plant bears the same relationship to its realizable value (and present value, to the extent that this is measurable), as does the carrying value of domestic plant.

Are financial statements meaningful under exchange rate fluctuations? : financial analysis

The key requirements are that we know the time-dependent nature of the future realizable values, that the insurer can liquidate its assets and liabilities at each evaluation point (although it does not have to do so), and that insurers will add capital when needed.

Suppose that we have a line of business with riskless assets and risky losses, which can have only two possible realizable values. The values and their probabilities are given in Table 10.

The value of assets is denoted by [Mathematical Expression Omitted]; assets are cash (the realizable value is certain).

For solvency risk measurement, the accounting treatment should directly reveal realizable value variations.

This is due to accounting bias, which occurs when the current recorded value differs from the current realizable value.