› CFA › CFA Level 1 › CFA Level 1 Question of the Week – Financial Reporting and Analysis (inventory)

CFA Level 1 Question of the Week – Financial Reporting and Analysis (inventory)

Add A Reply
Login
  • Author
    Posts
    • Avatar of Matt_AnalystPrepMatt_AnalystPrep
      Participant
        • CFA Charterholder
        09 Mar 2020 at 7:07 am
        Up
        12
        ::

        Core Corp. reports under IFRS and its inventory was written down to $6,500. However, due to a shortage in supply, the Net Realizable Value (NRV) of inventory recently increased to $8,000. Which of the following is most likely the value of the write-up of inventory?

        • A. $1,500
        • B. $0
        • C. Cannot be ascertained
      • Avatar of Matt_AnalystPrepMatt_AnalystPrep
        Participant
          • CFA Charterholder
          13 Mar 2020 at 8:01 am
          Up
          3
          ::

          The correct answer is A.

          Under IFRS, the inventory can be written up later if the value of inventory is recovered. Since the NRV of inventory increased from $6,500 to $8,000, there will be a write-up of inventory by $1,500.

          Note: Under U.S. GAAP, no write-up is allowed.

      • Author
        Posts
      Viewing 1 reply thread
      • You must be logged in to reply to this topic.