Net Realisable Value of Trade Receivables

Net Realisable Value

In the balance sheet, receivables should be carried at their Net Realisable Value (‘NRV’). Amounts that are considered unrecoverable or doubtful of recovery should be provided for or netted off from the gross receivables, in the balance sheet. The overriding requirement is that all doubtful accounts should be adequately reserved or provided for.

Realisation from Debtors

Remittances from customers should normally be accompanied by an advice indicating the invoice against which the payment is being made. In the absence of such intimation, the remittance should be applied towards outstanding on a FIFO basis.


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