PRC-1 · Chapter 7 · Question 93 of 100
According to the matching principle applied by IAS 2, when is the carrying amount of inventory formally recognized as an expense?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) In the period in which the related revenue is recognized (i.e., when sold).
Explanation
The matching concept requires expenses to be matched against the revenues they help generate. Therefore, inventory remains an asset until it is sold, at which point its cost becomes the Cost of Sales expense.
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