When an earlier inventory write-down is reversed under IAS 2, the inventory's revised carrying amount cannot exceed:
Correct answer: B. Its original cost before the write-down
- A. Its current replacement cost
- B. Its original cost before the write-down
- C. Its estimated selling price
- D. Its previous year's closing balance
Explanation
A reversal is limited so that the inventory does not exceed the cost it would have had if no write-down had been recognized. This prevents an earlier loss reversal from creating an amount above original cost.
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About Inventory Valuation
Inventory valuation determines the cost of unsold goods and its effect on cost of sales and profit. The work covers inventory counts, included costs, FIFO and weighted-average costing, and the rule that inventory is reported at the lower of cost and net realisable value, not simply at its expected selling price.
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