# NRV Method at Split-Off Stage
The Net Realisable Value (NRV) method allocates joint cost in proportion to each product's net realisable value — sales minus further processing and selling expenses.
## Step 1: Decide Sales Price Base
- If further processing is needed → use sales price after further processing
- If saleable at split-off → use sales price at split-off
## Step 2: Build the NRV Table
| Item | Joint Product 1 | Joint Product 2 |
|---|---|---|
| Sales price (after/before further processing) | xx | xx |
| × No. of units | xx | xx |
| Total Sales Value | xxx | xxx |
| Less: Further Processing Cost | (xx) | (xx) |
| Less: Further Selling Expenses | (xx) | (xx) |
| Final NRV | xxx | xxx |
## Step 3: Allocate
Distribute total joint cost in the ratio of Final NRV across products.
## Why NRV?
NRV is theoretically superior because it isolates the value created up to the split-off point by stripping away post-split-off costs from total revenue. This avoids penalising or rewarding a product for the further processing effort.