IAS 2 require that inventories be reinstated to the extent that the new carrying amount does not:
A)exceed the net realisable value in the previous period.
B)exceed the lower of the original cost.
C)exceed the net realisable value in the current period.
D)exceed the lower of the original cost or the net realisable value in the current period.

Question

Quizplus · Accepted Answer

IAS 2 requires inventories to be measured at the lower of cost or net realisable value. When there is a decrease in net realisable value in the current period, inventories should be written down to the extent that the carrying amount does not exceed the lower of the original cost or the net realisable value in the current period. Therefore, option D is correct. Option A is incorrect as it refers to the net realisable value in the previous period, which is not relevant to the current period's financial statements. Option B is incorrect as it only considers the original cost and not the lower of that cost or the net realisable value in the current period. Option C is also incorrect as it only considers the net realisable value in the current period, without taking into account the lower of that value or the original cost.

IAS 2 Require That Inventories Be Reinstated to the Extent