Under International Financial Reporting Standards (IFRS), which of the following is true regarding inventory write-downs and/or recovery of a write-down?
A) Recovery of inventory write-downs is prohibited under IFRS.
B) IFRS requires separate reporting of reversals of inventory write-downs.
C) IFRS requires companies to record write-downs in a separate loss account.
D) All of the choices are correct.

Question

Quizplus · Accepted Answer

Under IFRS, reversals of inventory write-downs are required to be reported separately. This is because the original write-down was recognized as a loss, and the recovery of the write-down is considered a gain. Therefore, it cannot be netted against other gains or losses. Option A is incorrect because IFRS does not prohibit the recovery of inventory write-downs, as long as the recoveries do not exceed the original write-down amounts. Option C is incorrect because IFRS requires inventory write-downs to be recorded as a reduction in the carrying value of the inventory account, not in a separate loss account. Option D is incorrect because only option B is correct.

Under International Financial Reporting Standards (IFRS), Which of the Following