Write-Down of Inventories to NRV

At the reporting date a Company would like to calculate the net realisable value of its inventory and write down its inventory to the lower of cost and net realisable value in accordance with TFRS for NPAEs.

Keywords: Mazars, Thailand, Accounting, TFRS, NPAEs, IAS 2

13 October 2014

The Company is a manufacturer and holds inventory:

i. Finished goods;

ii. Work in process; and

iii. Raw materials.

How does the Company calculate and write down the inventory to net realisable value?



Cost of inventory – at the reporting date


Selling price


Less: Estimated costs of completion


Less: Estimated costs to sell


Net realisable value


Write down of inventory


In this computation, the cost of inventory is higher than the net realisable value. This may arise from the selling price having declined or the estimated costs of completion or the estimated costs to be incurred to make the sale having increased. As a result, writing inventories down below cost to net realisable value would be required at the reporting date.

Refer to TFRS for NPAEs paragraphs 94 – 97 and IAS 2 Inventories