PRC-1 · Chapter 7 · Question 76 of 100
If circumstances that previously caused inventory to be written down below cost no longer exist, resulting in an increase in NRV, what is the accounting treatment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The amount of the write-down is reversed so that the new carrying amount is the lower of the original cost and the revised NRV.
Explanation
IAS 2 states that when circumstances change and NRV increases, the previous write-down must be reversed (up to the amount of the original write-down) in the Statement of Profit or Loss.
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