Page 30 - Financial Accounting 1 ITC Preparation June 2018
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ITC EXAM PREP – JUNE 2018
Measurement
NRV
• Definition
Estimated selling price
Less estimated costs of completion
Less estimated selling costs
• Not the same as FV less costs to sell
NRV is entity‐specific
• NRV of raw materials is usually replacement cost
If used in the production of finished goods, not written down to NRV if the finished good can be
sold above cost
• Annual NRV assessments required
NRV write down - expense to P/L i.e. included in cost of sales
NRV write down reversal - Reduction of expense in P/L
When evidence of change in circumstances exists
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