Net realizable value

Net realizable value is an estimated selling price of a good less the estimated cost of completion and disposal. In formula:

Inventory Sales Value - Estimated Cost of Completion and Disposal = Net Realizabl Value

For example, if a good is expected to sell for $100 to a customer, but it will take an additional $20 to complete and $10 to advertise to the customer, its Net Realizable Value will be $100-$20-$10=$70

References

1. Intermediate Accounting 8th Canadian Edition, page 450, Kieso, Weygandt, Warfield, Young, Wiecek, John Wiley & Sons Canada, Ltd, 2007, ISBN 978-0-470-83979-9