Net realizable value (NRV) is a measure of a fixed or current assets worth when held in inventory, in the field of accounting. It is a valuation method that considers the total amount of money an asset might generate upon its sale, less a reasonable estimate of the costs involved. NRV is part of the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) that apply to valuing inventory, so as to not overstate or understate the value of inventory goods.

NRV is generally equal to the selling price of the inventory goods less the selling costs (completion and disposal). Therefore, it is expected sales price less selling costs (e.g. repair and disposal costs). NRV prevents overstating or understating of an assets value. It is a conservative method used by accountants to ensure the value of an asset isnt overstated.

NRV is used to evaluate accounts receivable and inventory, and is also used in cost accounting. It is found by determining the expected selling price of an asset and all the costs associated with the eventual sale of the asset, and then calculating the difference between these two. The formula for NRV is: NRV = Expected selling price - Total production and selling costs.

NRV is an approach to valuing assets fairly and conservatively, and is required for compliance with GAAP and IFRS. It checks balance sheet asset values against their fair market values and then adjusts the balance sheet to reflect asset overstating or understating. NRV considers two factors for measuring value - an assets fair market value (FMV) and the costs to sell or obtain that value.

In summary, NRV is a measure of an assets worth when held in inventory, and it is used to ensure that the value of an asset isnt overstated. It is found by determining the expected selling price of an asset and all the costs associated with the eventual sale of the asset, and then calculating the difference between these two. NRV is required for compliance with GAAP and IFRS, and it checks balance sheet asset values against their fair market values to reflect asset overstating or understating.