Lesson Plan

• Describe the concept of Net Realisable Value (NRV) and its components.
• Explain the “lower of cost or NRV” rule under UK GAAP and IFRS.
• Apply the NRV formula to calculate inventory values and identify write‑downs.
• Prepare the correct journal entry for an inventory write‑down and its possible reversal.
• Evaluate the advantages and limitations of using the NRV method.

• Projector and screen
• Whiteboard and markers
• Printed worksheet with inventory data and calculations
• Calculators (one per pair)
• Accounting textbook (chapter on inventory valuation)
• Handout showing sample journal entry and flowchart diagram

Begin with a quick story about a retailer who discovered a large loss because inventory was over‑valued. Ask students what information they would need to avoid this. Review the basic cost concepts already covered and outline that by the end of the lesson they will be able to calculate NRV, decide on write‑downs, and record the appropriate journal entries.

1. Do‑Now (5'): Students solve a brief cost‑vs‑selling‑price problem on the board.
2. Mini‑lecture (10'): Define NRV, present the formula, and discuss the “lower of cost or NRV” rule.
3. Guided Practice (12'): Work through the illustrative example step‑by‑step, filling in a table together.
4. Independent Activity (15'): Pairs complete a worksheet calculating NRV for three different inventory items and determine required write‑downs.
5. Journal Entry Workshop (8'): Students draft the corresponding journal entries, including a reversal scenario.
6. Check for Understanding (5'): Quick quiz (exit ticket) with two questions – one calculation, one conceptual.

Summarise the key steps of the NRV method and why it safeguards accurate financial reporting. Collect exit tickets to gauge mastery, and assign homework: complete a set of NRV calculations for a new case study and prepare the journal entries.