Accounting learning tool
Lower of Cost and Net Realisable Value Calculator
Compare inventory cost with net realisable value and calculate any write-down.
Inputs and results stay in this browser. Currency symbols are illustrative; use any consistent currency.
Understand Lower of cost and NRV
One idea, three depths
Choose how deeply to explain Lower of cost and NRV
Lower of cost and NRV: Compare inventory cost with net realisable value and calculate any write-down.
Age 5Explain it to a 5-year-oldStart with a picture
Imagine using Lower of cost and NRV to answer this question: compare inventory cost with net realisable value and calculate any write-down? Enter Recorded inventory cost, Expected selling value, Completion and selling costs; the calculator shows Permitted carrying amount. Try changing one number and watch what happens to Permitted carrying amount. The answer tells you Permitted carrying amount.
Age 15Explain it to a 15-year-oldConnect it to the formula
Inventory is not carried above the amount expected to be realised from its sale, subject to the applicable reporting framework. The rule is NRV = selling price − completion and selling costs; carrying amount = lower of cost and NRV. Its input values are Recorded inventory cost, Expected selling value, Completion and selling costs, and the main result is Permitted carrying amount. Try changing one number and watch what happens to Permitted carrying amount.
CollegeExplain it at college levelState the model precisely
This calculator evaluates one accounting relationship within a consistent entity, currency, reporting period and recognition policy. The implemented relation is NRV = selling price − completion and selling costs; carrying amount = lower of cost and NRV, evaluated from Recorded inventory cost, Expected selling value, Completion and selling costs to produce Permitted carrying amount. Inventory is not carried above the amount expected to be realised from its sale, subject to the applicable reporting framework. Recognition, measurement, tax, consolidation, foreign-currency and disclosure rules may require adjustments under the accounting framework that applies to the entity.
What this accounting tool does
Compare inventory cost with net realisable value and calculate any write-down.
Why the relationship works
Inventory is not carried above the amount expected to be realised from its sale, subject to the applicable reporting framework.
The accounting formula
NRV = selling price − completion and selling costs; carrying amount = lower of cost and NRV
Inputs and period consistency
This model uses Recorded inventory cost, Expected selling value, Completion and selling costs. Use the same reporting period, currency, entity boundary and accounting policy for every input.
What the result means
The primary output is Permitted carrying amount; supporting outputs include Net realisable value, Inventory write-down. Trace each amount back to the relevant ledger or statement line before relying on it.
Limits of this compact model
The calculator teaches one relationship. Recognition, measurement, tax, consolidation, foreign-currency and disclosure rules may require additional adjustments under the framework that applies to the entity.
Supporting sourcesAcademic referencesPrimary standards, textbooks and complete citations
Standards, reading and academic references
Use the calculator as the worked interaction, then consult the primary standards and academic textbooks listed below. MW SysArc links to the original sources; the explanation on this page is original and does not reproduce them.
Principles of Accounting, Volume 1: Financial Accounting
Read the free OpenStax financial accounting textbookCite this book
- APA 7
- Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
- MLA 9
- Franklin, Mitchell, et al. Principles of Accounting, Volume 1: Financial Accounting. OpenStax, 2019, https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters.
- Chicago author-date
- Franklin, Mitchell, Patty Graybeal, and Dixon Cooper. 2019. Principles of Accounting, Volume 1: Financial Accounting. Houston, TX: OpenStax. https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters.
OpenStax entries are free to read online. Follow the licence shown on each linked source before redistributing or adapting its content.
Reuse the page responsiblyCite this pageAPA, MLA, Chicago, Harvard, BibTeX and RIS
These formats cite this calculator page itself. They are separate from the academic references above, which support the mathematical method and terminology.
APA 7
MW SysArc. (2026, July 21). Lower of Cost and Net Realisable Value Calculator. MW SysArc Tools. https://accounting.mwsysarc.com/lower-of-cost-and-net-realisable-value
MLA 9
MW SysArc. “Lower of Cost and Net Realisable Value Calculator.” MW SysArc Tools, 21 July 2026, https://accounting.mwsysarc.com/lower-of-cost-and-net-realisable-value. Accessed 26 Aug. 2026.
Chicago 17
MW SysArc. “Lower of Cost and Net Realisable Value Calculator.” MW SysArc Tools. Published July 21, 2026. Accessed August 26, 2026. https://accounting.mwsysarc.com/lower-of-cost-and-net-realisable-value.
Harvard
MW SysArc (2026) ‘Lower of Cost and Net Realisable Value Calculator’, MW SysArc Tools. Published 21 July 2026. Available at: https://accounting.mwsysarc.com/lower-of-cost-and-net-realisable-value (Accessed: 26 August 2026).
BibTeX and RIS records
BibTeX
@misc{mwsysarc_lower_cost_net_realisable_value_2026,
author = {{MW SysArc}},
title = {Lower of Cost and Net Realisable Value Calculator},
howpublished = {MW SysArc Tools},
year = {2026},
url = {https://accounting.mwsysarc.com/lower-of-cost-and-net-realisable-value},
note = {Published July 21, 2026; accessed August 26, 2026}
}RIS
TY - ELEC
AU - MW SysArc
TI - Lower of Cost and Net Realisable Value Calculator
T2 - MW SysArc Tools
PY - 2026
DA - 2026-07-21
Y2 - 2026-08-26
UR - https://accounting.mwsysarc.com/lower-of-cost-and-net-realisable-value
N1 - Published July 21, 2026
ER -Clear answers
Frequently asked questions
What does the Lower of cost and NRV do?
Compare inventory cost with net realisable value and calculate any write-down.
How does the Lower of cost and NRV work?
The calculator applies NRV = selling price − completion and selling costs; carrying amount = lower of cost and NRV. Inventory is not carried above the amount expected to be realised from its sale, subject to the applicable reporting framework.
What can I learn from the Lower of cost and NRV?
You will connect Recorded inventory cost, Expected selling value, Completion and selling costs to Permitted carrying amount, then see how the relationship belongs in the accounting process.
Does MW SysArc receive or store what I enter?
No. The calculation runs locally in your browser. MW SysArc does not receive or store your calculation inputs.
How should I use the result?
Use the result as an educational or reconciliation reference. Confirm the reporting period, accounting policy and source records before relying on it.
Last reviewed . Calculations tested .