Methods of Ascertaining Net Realisable Value (NRV)

For ascertaining the net realisable value of different items of stock any one of the following
methods may usually be followed :
1. Total Inventory Method : The aggregate of the total cost of all items is found out. It is
compared with the total net realisable value of such items. The lower of the two is
applied for inventory valuation.
2. Group Method : Items of same nature are grouped. The cost and NRV of each group are
separately compared and the lower amount for each group is applied for stock valuation.
3. Individual Identification Method : For each item of stock, corresponding cost and net
realisable value are compared and the lower of the two is considered for valuation of
the individual stock.