Explain the Meaning of Net Realizable Value and When Raw

question 62

Essay

Explain the meaning of net realizable value and when raw materials, work in progress and finished goods inventories need to be written down.

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Definitions:

Stock Dividend

A dividend payment to shareholders in the form of additional shares of stock, rather than cash.

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on the certificate. It is a legal amount per share that represents the minimum stock value.

Market Value

The prevailing cost to purchase or dispose of an asset or service in the market.

No-Par

Refers to stocks issued without a par value; no minimum value is assigned to these shares.