AQ Pty Ltd, a large proprietary company that is a reporting entity, found that the carrying amount of its inventory exceeded its net realisable value, resulting in the recognition of a large expense during the 20X3 financial year.This inventory impairment expense was significantly more than for previous years.This expense should:
A)be separately disclosed only in the profit or loss statement
B)be separately disclosed either in the profit or loss statement or in the notes to the financial statements
C)be separately disclosed in the notes to the financial statements
D)not be separately disclosed because AQ Pty Ltd only has to comply with what are described in the textbook as the core accountings standards.

Question

Quizplus · Accepted Answer

According to AASB 101, any material impairment loss should be separately disclosed either in the profit or loss statement or in the notes to the financial statements. As the inventory impairment expense was significant and higher than previous years, it is considered material and should be disclosed. AQ Pty Ltd is a reporting entity, therefore they must comply with all accounting standards, including the requirement to disclose material items.

AQ Pty Ltd, a Large Proprietary Company That Is a Reporting