Acca financial Accounting (FA) Study Text ac ca (FA)

Net realisable value (also referred to as 'fair value less further costs to 

sell') 

Net realisable value is the net amount that would be realised after incurring any 

further costs required to make the sale. In effect, it is the fair value of the item, 

less any further costs that must be incurred in order to sell that item. 

This may include, for example, further work and costs required in order to make 

items of work in progress into finished goods before they could be sold. If IAS 2 

is applied, when items of inventory are old or obsolete, they are likely to be 

valued at net realisable value, rather than cost.