PRC-1 · Chapter 7 · Question 23 of 100
When a business records a write-down of inventory to Net Realizable Value, where is this expense initially recognized?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) As an expense in the Statement of Profit or Loss.
Explanation
IAS 2 requires that any write-down of inventory to NRV, and all losses of inventory, be recognized as an expense in the period the write-down or loss occurs.
More IAS 2: Inventories MCQs
- Q25Which of the following situations dictates that raw materials should NOT be written down below their cost?
- Q26How are trade discounts treated when determining the cost of inventory?
- Q27How should refundable sales taxes (e.g., input VAT) paid on the purchase of raw materials be treated?
- Q28A business has 200 units of stock. The units cost Rs. 22 each. What is the value of the closing stock?
- Q29In a manufacturing entity, which of the following items is considered 'Work in Progress' (WIP)?