Valuation of inventories

The company values inventory both in cost terms and NRV. Then it considers which ever is lower. Eg. if you purchased computers for 10,0000₹ and want to sell them immediately because you want to buy another one. Currently, your inventory after few days, the market selling price is down to 9,0000₹ it is a loss to you when you sell it. To record this loss, this philosophy is used to value inventory at lower of cost or NRV.  

Cos 90,000₹ - closing inventory balance @ NRV

NRV loss write off 10,000₹ Loss is debited to revenue

Inventory 1,00,000₹ - Inventory always recorded at historical cost or NRV

Please note that on the balance sheet, only revalued inventory value is recorded. The above entry is just an example on how a loss is recognised. Sent a PM with examples

Hi sry made a mistake

usually the adjustment with cos is like

By Inventory a/c

To COS a/c

(cos reduced by closing inventory)

so

By Inventory a/c 90000

To Cos a/c 90000

By NRV loss write off a/c 10000

or simply

Cos a/c 10,000

To Inventory 10,000

note. Adj made again. I’m giving up. Some help appreciated eon entries.