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CFA Level 1 Question of the Week - Financial Reporting and Analysis

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?
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CFA Level 1 Question of the Week - Financial Reporting and Analysis 5 votes

A. $1,500
100% 5 votes
B. $0
0% 0 votes
C. Cannot be ascertained
0% 0 votes

Comments

  • Matt_AnalystPrepMatt_AnalystPrep MontrealPosts: 141 Associate
    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.
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