11-02-2003, 08:02 PM
Hi Zubair!
^I don't disagree with the principle that if NRV is lower than cost, we should use it as proper valuation. That is undisputed. My question was what value should it reflect? I was asserting that it should reflect the net value realizable at the balance sheet date rather than a past or a future realizable value. NRV is by its definition an estimate (you are determining value of a good that is not sold as yet). Therefore, you have to go with an assumed price(unless the co has a firm agreement and price is established in it). But it is the timing of estimate which is concern of mine. It should be NRV at balance sheet date not a future date when goods will actually be disposed off.
By the way Raza, since u have already decided to go with ur auditor, does this discussion matter to u or is it just an academic excercise?
Take care
^I don't disagree with the principle that if NRV is lower than cost, we should use it as proper valuation. That is undisputed. My question was what value should it reflect? I was asserting that it should reflect the net value realizable at the balance sheet date rather than a past or a future realizable value. NRV is by its definition an estimate (you are determining value of a good that is not sold as yet). Therefore, you have to go with an assumed price(unless the co has a firm agreement and price is established in it). But it is the timing of estimate which is concern of mine. It should be NRV at balance sheet date not a future date when goods will actually be disposed off.
By the way Raza, since u have already decided to go with ur auditor, does this discussion matter to u or is it just an academic excercise?
Take care
