Accounting · Inventory Valuation
When the net realizable value (NRV) of inventory falls below its original cost, IFRS guidelines require which treatment?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1No adjustment is made until the actual sale of inventory occurs
- 2A write-down of inventory to its NRV, recognized immediately through the Profit and Loss statement✓
- 3Creation of a separate revaluation reserve within the equity section
- 4Disclosure in the notes to accounts only, with no financial recognition
Correct answer
A write-down of inventory to its NRV, recognized immediately through the Profit and Loss statement
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