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Stock valued at net realisable value

One of the acceptable methods to value stock is at the lower of cost and net realisable value (NRV). NRV is broadly defined as the estimated selling price of an asset less any disposal costs.

HMRC provides the following guidance in their Business Income Manual.

The realisable value is the expected sale price of the relevant stock in the condition in which it is expected to be sold in the trader’s normal selling market. From that value are deducted the estimated further costs which will have to be incurred to get the stock into its normal sale condition to arrive at the net realisable value.

The guidance continues that the net realisable value may be less than cost because of deterioration, obsolescence, or changes in demand. However, at the reporting date there may be a reasonable expectation that the proceeds of sale of some stock in future reporting periods will not produce enough income to cover its cost. If so, a loss on such stock should be recognised in the reporting period under review by writing off the irrecoverable costs incurred.

Source: HM Revenue & Customs Wed, 01 Jul 2020 05:00:00 +0100

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC
FT
BBC
VEALE WASBROUGH VIZARDS
CESP
PRACTICE INDEX
SIMCOMM ACADEMY

More Local:
FOOTPLATE EXPERIENCE
ANGLEBURY PRESS
OFFCAMBER.CO.UK