CH9
CH9
A company abandons the historical cost principle when the future utility (revenue-producing ability) of the asset
drops below its original cost.
Net realizable value (NRV) is the is the estimated selling price in the ordinary course of business, less
reasonably predictable costs of completion and disposal (often referred to as net selling price).
Analysis of Inventories
Inventories: Additional Valuation Issues 9-3
Common ratios used in the management and evaluation of inventory levels are inventory turnover and
average days to sell the inventory.