## NRV Calculation by Inventory Type
### 1. Finished Goods (FG) NRV
$$\text{NRV of FG} = \text{Estimated Selling Price} - \text{Estimated Cost to Make the Sale}$$
Cost to make the sale includes: commission, brokerage, packaging, delivery/distribution costs.
### 2. Work in Progress (WIP) NRV
$$\text{NRV of WIP} = \text{SP of FG} - \text{Estimated Cost of Completion} - \text{Estimated Cost to Make the Sale}$$
Logic: WIP has not yet been completed or sold — so we estimate what it would fetch if fully processed and sold.
### 3. Raw Material (RM) NRV — Special Rule
RM is not sold directly; it is consumed to make FG. So RM NRV depends on whether the FG makes a profit:
| FG Situation | RM Valuation |
|---|---|
| FG sold at or above cost | RM valued at Cost |
| FG sold below cost (FG NRV < FG Cost) | RM valued at Replacement Cost |
Replacement Cost = Amount the entity would have to pay TODAY to replace/repurchase that asset at current market price.
> Replacement cost is NOT the same as original cost. It is the current repurchase price in the market.