IFRS Defines Net Realizable Value for Lower-Of-Cost-Or Net Realizable Value

question 37

Multiple Choice

IFRS defines net realizable value for lower-of-cost-or net realizable value as

• A) estimated selling price less costs to complete and sell.
• B) estimated selling price in the normal course of business.
• C) net market value.
• D) replacement cost less costs of disposal.
• IFRS:

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Definitions:

NPV

Net Present Value, a calculation that represents the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Discount Rate

The interest rate that a central bank charges financial institutions for short-term loans, or used in discounted cash flow (DCF) analysis to present value future cash flows.

APR

The Annual Percentage Rate, which is the interest rate for a whole year on a loan, including fees.

Present Value Payback Period

A capital budgeting technique that calculates the period of time required for the present value of future cash flows to cover the initial investment cost.