The following information pertains to inventory held by a company at December 31, 2011. What is the amount of inventory loss shown on the income statement under IFRS?

Question

The following information pertains to inventory held by a company at December 31, 2011.  What is the amount of inventory loss shown on the income statement under IFRS?

Quizplus · Accepted Answer

Under IFRS, inventory must be stated at the lower of cost or net realizable value. The net realizable value is the estimated selling price less any estimated costs of completion and selling expenses. The inventory loss is equal to the difference between the carrying amount of inventory ($16,000) and the net realizable value ($12,000), which is $4,000. Therefore, the correct answer is C.

The Following Information Pertains to Inventory Held by a Company