Realizable cost refers to the estimated cost that would be incurred to sell an asset or complete a project or activity, taking into account any costs that would be saved as a result of the sale or completion. It represents the net amount that a company can expect to receive from the sale of an asset or the completion of a project or activity after taking into account any direct costs associated with the sale or completion.

For example, if a company is considering selling a machine, the realizable cost of the machine would be the estimated selling price of the machine, less any direct costs associated with the sale (such as sales commissions or legal fees). Similarly, if a company is considering completing a construction project, the realizable cost of the project would be the estimated revenue from completing the project, less any direct costs associated with completion (such as materials or labor costs).

Realizable cost is an important consideration in determining the appropriate carrying value of an asset on the balance sheet, and it is used in various accounting standards and frameworks (such as IFRS and GAAP) to ensure that assets are carried at their net realizable value.

Here's an example to illustrate realizable cost:

Let's say a company is considering selling a machine that it purchased for $50,000. The company estimates that the machine has a market value of $60,000, and that it would incur direct costs of $2,000 (such as sales commissions and legal fees) to complete the sale.

To determine the realizable cost of the machine, the company would subtract the direct costs of the sale from the estimated market value of the machine, as follows:

Realizable cost = $60,000 - $2,000

Realizable cost = $58,000

In this case, the realizable cost of the machine is $58,000. This means that if the company were to sell the machine, it could expect to receive $58,000 in net proceeds after deducting the direct costs of the sale. If the company were to continue to hold the machine on its balance sheet at its original cost of $50,000, it would be overstating the value of the machine by $8,000 (i.e., the difference between the realizable cost of $58,000 and the carrying value of $50,000).

Therefore, the company should adjust the carrying value of the machine to its realizable cost of $58,000, in accordance with the accounting standards and frameworks.