How to Get NRV with ADA and BDE

To calculate the Net Realizable Value (NRV) with Allowance for Doubtful Accounts (ADA) and Bad Debt Expense (BDE), subtract the ADA from Accounts Receivable (AR) to find the Net Realizable Value. The NRV represents the estimated amount of receivables expected to be collected after accounting for potential losses due to uncollectible accounts, which is determined by adjusting AR with ADA and recognizing BDE as an expense in the income statement. This calculation ensures a more accurate representation of the assets’ true value in financial reporting.