Alternatively, this “expense” may be the anticipated write-off amount for receivables or expenses incurred to collect this debt. IAS 2.9 stipulates that inventories must be measured at the lower of their cost and net realisable value (NRV). NRV is defined as the estimated selling price in the ordinary course of business minus the forecasted costs of completion and estimated expenses to facilitate the sale (IAS 2.6). Formula and Calculation of Net Realizable Value There are still a hundred on hand, costs using FIFO, but the speakers are obsolete and management feels they can sell them with some slight modifications to each one that cost $20 each. Because of the confusion that can arise between the differences between the IFRS and GAAP, accounting bodies in the U.S. and elsewhere have expressed a desire to converge accounting rules between the two systems. It is likely that such convergence efforts will remove the use of LIFO costing in the U.S. and create a more consistent definition of net realizable value, among other significant accounting changes. The actual amounts owed to Tiger by customers is $1,000,000 on December 31, 2023. The amount that is estimated that Tiger will not collect from customers is $40,000 […]