What is net realizable value of accounts receivable?

Question

0

McNeil 0 Comments

How can I find the net realizable value of the accounts receivable? For example, for Property, Plant and Equipment, it’s the amount that you can sell it for but what about the accounts receivable?

2 Answers

score 0 · Answer 1 · 2012-12-02T21:45:36+00:00

The net realizable value of the accounts receivable is the price at which the transaction is expected to be settled. If you have sold goods and you have invoiced the other party for $1,000 the net realizable value is broadly speaking $1,000. There are exceptions where for example the other party is in financial difficulties and you know that the amount that you will receive is less than what originally recognized. In this situation, the net realizable value will be less and you need to impair your asset to bring it to the value at which the transaction is expected to be settled at.

score 0 · Answer 2 · 2013-05-07T22:20:00+00:00

The net realisable value as a term described what you would expect to recover if you would “sell” or “realize” your assets now. Regarding accounts receivable, the net realisable value is the total balance that you would be able to recover if you deduct that bad debt and any cost that you would need to incur to recover your debtor amounts.