Explain the concept of Net Realizable Value in reporting Inventories and Account Receivables?

Q.2. Case Study:

Moonstruck Enterprises Inc. is a retailer of Italian Furniture and has 5 major product lines. Sofas, dining tables, beds, closets and lounge chairs. At December 31st 2020, quantity on hand, cost per unit, and Net realizable value (NRV) per unit of the product lines are as follows:

Product Line Quantity on Hand Cost Per Unit NRV Per Unit

Sofas 100 $1000 $1,020

Dining Tables 200 $ 500 $450

Beds 300 $1500 $1600

Closets 400 $ 750 $770

Lounging Chairs 500 $ 250 $200

Compute the valuation of the inventory for Moonstruck Enterprises at December 31st 2020 under IAS2 using the "lower of cost and NRV" principle.