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Net Realisable Value: Recognising the Market Before the Sale

A vehicle does not need to be sold before the market can tell the dealership that its carrying value is too high. That is the practical importance of net realisable value. The cost card records what the dealership invested in the vehicle. NRV asks a different question: what net amount does the dealership now expect to realise from selling it in the ordinary course of business? When those numbers diverge, the accounting should not wait for the eventual loss to become unavoidable. NRV is not...