Under IAS 2, what adjustment needs to be made after an inventory write-down if the selling price subsequently increases?
A) No adjustment is necessary. Once inventory is written down, it cannot be increased under IASB standards.
B) It should be sold at the replacement cost.
C) The inventory write-down should be reversed to bring it in line with the new net realizable value.
D) Recovery of inventory loss should be debited to reflect the increase in inventory value.

Question

Quizplus · Accepted Answer

The inventory write-down should be reversed to bring it in line with the new net realizable value. This is in accordance with IAS 2 which requires the reversal of inventory write-downs if the reason for the write-down no longer exists, such as an increase in selling price. This will result in an increase in inventory value and a corresponding increase in profit.

Under IAS 2, What Adjustment Needs to Be Made After